The National Assembly Thursday passed an amended controversial Finance (Supplementary) Bill, dubbed as the "mini-budget", and the State Bank of Pakistan (Amendment) Bill 2021 during a marathon hours-long session amid the opposition benches’ hue and cry.
The finance bill amends certain laws related to taxes and duties and the State Bank of Pakistan (Amendment) Bill 2021, both tabled on Dec 30, is necessary to ensure that Pakistan’s sixth review of the $6 billion Extended Fund Facility gets cleared by the International Monetary Fund’s (IMF) executive board.
The amendments proposed by the opposition to the Supplementary Finance Bill were rejected by 18 votes in the National Assembly. All the amendments received 150 votes from members of the opposition in their favour while 168 against from the treasury benches.
The NA session was marked by noisy protests by members of the opposition parties over the ‘mini budget’.
The session resumed under the chairmanship of NA Speaker Asad Qaiser. Prime Minister Imran Khan, Planning and Development Minister Asad Umar and Foreign Minister Shah Mahmood Qureshi are also in attendance.
PM Imran was welcomed by loud sloganeering from the opposition benches as treasury lawmakers thumped their desks to drown them out.
It is reminded here that the approval of the supplementary finance bill is necessary if Pakistan is to ensure sixth review of the $6 billion Extended Fund Facility (EFE) by the IMF’s Executive Board, which is scheduled to meet towards the end of this month.
Later, in the amended bill, the government dropped its plan to impose additional sales taxes on children’s formula milk, bread, and small cars.
The government's amendments to the proposed bill were approved by the House.
The government introduced changes to Clause 3 of the bill, under which small shops will not be taxed on bread, chapattis, sheermal, naans, vermicelli, buns and rusk. Tier one retailers, restaurants, food chains and sweet shops will be taxed on the sale of these items.
A sales tax of 8.5 per cent will be imposed on 1,800 cc domestic and hybrid and domestic cars. A tax of 12.75pc will be imposed on 1,801 to 2,500 cc hybrid vehicles while imported electric vehicles will be taxed at 12.5pc.
No general sales tax will be imposed on a 200g carton of milk, while a 17pc GST will be imposed on formula milk worth more than Rs500.
Tax on imported vehicles was also increased under the changes, from five per cent to 12.5pc. The federal excise duty on all imported vehicles will remain the same.
There will be a duty of 2.5pc on locally manufactured 1,300 cc vehicles, down from the 5pc proposed earlier. The duty on locally manufactured 1,300 to 2,000 cc cars was also reduced to 5pc from 10pc.
A 10pc duty will be imposed on locally manufactured cars greater than 2,100 cc.
The government's amendments to Clause 5 were also approved by the NA.
Bilawal, Tarin in counter arguments
PPP Chairman Bilawal Bhutto-Zardari said that the amendment he introduced concerned taxes on crude oil and imported items. "My question to the finance minister is whether they have accepted this. He himself said that they are withdrawing some of the taxes."
He questioned whether the finance minister had an issue with the fact that it mentioned his name and those of Shazia Marri and Raja Pervaiz Ashraf. "What was the harm in it being accepted?"
Referring to the finance minister, Bilawal said that Tarin stated that past governments had made matters worse even though he had previously served as the country's finance minister.
Addressing the finance minister, Bilawal said that the finance minister is continuously asking why is the Opposition protesting, "so let us tell him that if the government is going to ignore the voice of a common man, we are going to highlight the issues.”
PPP leader said: “We know the address of your Karachi’s residence,” adding that "go and ask people why are they upset. If you will not go to people, we will bring people to you,” he said, reiterating that he knows Tarin's address.
Referring to the strict conditions of the IMF, Bilawal said that if the government is serious about Pakistan, they should reject the “IMF budget.”
“We will bring Pakistanis out of this economic situation,” he asserted.The PPP chairman said that some Karachi lawmakers had moved amendments and had also expressed their reservations regarding the mini-budget. He called on them to reject the finance bill and work with the opposition to steer the country out of the economic situation.
Responding to the PPP chairman, the finance minister said the opposition had claimed that the government was sacrificing the country's economic sovereignty and national security. "But they went to the IMF approximately 13 times. Did they forfeit our economic sovereignty each time?" he asked.
Taking the floor once again, Bilawal said that the finance minister had claimed that he did not renege on the promises he had made. "But neither the finance minister nor the prime minister stick to their promises." He said that this was the time to show the people the government's success in running the country before the next elections.
"But what is your success? The Economist says that Pakistan is the fourth most expensive country in the world, the most expensive in the region." He said that the inflation had risen to double digits and while the debt to GDP ratio had also soared. This is the what Naya Pakistan has delivered, he said.
Documentation of economy
Shedding light on the criticism regarding the supplementary bill being the “IMF bill”, Finance Minister Shaukat Tarin said that during the previous government’s tenure, 13 agreements were signed with the Fund.
“They (the Opposition) are saying that IMF has destroyed the economy of Pakistan, while they went to the IMF in their tenures as well,” he said.
Tarin further said that the PTI government is being accused of "mortgaging country's sovereignty”; however, the government was forced to approach the IMF. “We had no other option but to ask for IMF’s help,” he reiterated. Tarin also said that the supplementary finance bill is a step towards the “process of documentation.”
Addressing the allegations of the Opposition that the mini-budget will bring a tsunami of inflation in the country, the finance minister said that out of Rs343 billion taxes worth Rs280 will be refunded “then what is the issue?” “This is not a game of money,” he reiterated.
The minister underlined that the government has decided to withdraw its proposal to impose additional sales taxes on children’s formula milk, bread, laptops etc.
Tarin said that the country cannot achieve its target of 6-8% growth until the tax-to-GDP ratio is around 18-20%.
“Opposition’s protest against the supplementary finance bill is baseless,” Tarin said, adding that this will help in the documentation which will in return highlight the actual income of people.
SBP Bill passed amid opposition uproar
Shortly after the NA passed the mini-budget, the opposition benches were in an uproar against the "bulldozing" of the SBP bill and called for holding a detailed discussion after the speaker suspended the rules for debate.
Addressing the speaker, PML-N's Ahsan Iqbal called on him to not suspend the rules of the House. "If you suspend the rules and bulldoze the bill in the darkness of the night, then your name will go down in history among those who conspired to sell the country's economic sovereignty."
He urged the speaker to let lawmakers discuss the bill for two days.
Former prime minister Shahid Khaqan Abbasi said that the SBP bill was not in the country's interest. He said that the opposition was ready to debate the bill today and tomorrow.
Taking a dig at the government, Bilawal Zardari said that it was very rare to have the premier and the entire front row of the treasury benches in attendance. He reiterated calls for a detailed debate. "This bill says that Pakistan's defence expenditure will have just one bank account and all expenditures will be made through that account," he said, adding that this would make it easier for "international forces" to scrutinise the country's defence and nuclear expenditure.
The opposition began to chant slogans and surrounded the speaker's dais, who then initiated voting on all the amendments by the opposition which were subsequently rejected. The opposition's amendments were presented by the speaker after lawmakers resorted to chanting slogans against the government.
Following this, a clause by clause vote was initiated on the bill, all of which were approved by the House.
Reporter: Usman Khan