Reformed sales tax bill tabled in Pakistan Senate

ISLAMABAD - Despite stiff opposition from allied parties and the opposition, the Pakistan government Tuesday tabled the reformed general sales tax (GST) bill in the Senate after it was approved by the standing committee on finance.

Addressing the upper house of the parliament, Finance Minister Abdul Hafeez Shaikh said the reformed GST needs to be implemented because the government is looking to abolish all exemptions given earlier.

“Some powerful circles are against this tax, but they must realise that it is essential if they want the government to keep providing facilities,” he said.

Industry heavyweights, government-ally Muttahida Qaumi Movement (MQM) and main opposition party Pakistan Muslim League-Nawaz (PML-N) have already rejected the proposal.

The GST is currently levied at 17-25 percent on selective items but the government is seeking to impose it on all products at a flat 15 percent rate.

The PML-Quaid, Awami National Party (ANP) and Jamiat Ulema-i-Islam (JUI) had earlier opposed the new tax proposal but softened their stance when the bill was tabled in the house Tuesday.

Financial institutions and donor agencies working with the Pakistani government in its bid to achieve financial stability have also backed the idea of a broader tax net.

The reformed GST is expected to generate an additional Rs.50 billion for the national exchequer.

Meanwhile, International Monetary Fund press officer Raphael Anspapach told IANS that the organisation continues to work closely with the Pakistani authorities for completing the next review of the programme and disbursing its next tranche of money.

“In this context, we have emphasised that the implementation of the reformed GST is important in view of increasing the government’s revenue, which in turn will improve its ability to finance relief for flood victims, increase spending on poverty reduction, infrastructure reconstruction, health and education,” he said.

“We have also repeatedly stressed that by eliminating exemptions, the reformed GST, once fully implemented, will help create a more equitable tax system. Our assessment is shared by the Pakistani authorities,” the spokesman added.