ISLAMABAD: Finance Minister Ishaq Dar will give arguments on the increase in General Sales Tax (GST) on petroleum products from 17 to 22% in the Senate in a next few days.
On Tuesday, the government decided to increase sales tax on petroleum products from 17 percent to 22 and the Federal Board of Revenue (FBR) issued a notification in this regard.
According to a source, the government made this decision to recover imminent shortfall of Rs 175 billion revenue collection due to decreasing prices of petroleum products both in the local and international markets.
“The decision will enable the government to collect an additional Rs19 billion as GST and Rs10 billion on account of the existing petroleum levy just in the month of January 2015,” the source added.
However, this very act by the government has stirred a new legal debate about legitimacy of SRO issued by FBR, because according to legal experts, authority of levying new tax or increasing the existing tax ratio lied with the parliament.
PPP Senator Mian Raza Rabbani, who is also parliamentary leader of his party in the Senate, told this scribe that the said act of increasing the sales tax on petroleum products was in contradiction and of the Article 77 of the constitution of Pakistan which clearly said that the very authority of levying tax rested with the parliament and not with government or executive.
He said that this act was also violation of the Supreme Court judgment issued by former chief justice Iftikhar Chaudhry which also declared parliament as sole institution authorised to levy tax in the country. He proposed that government should present a mini-money bill in the National Assembly and get it approved and then impose this tax.
He said that the other senators had asked the treasury benches to ask the finance minister to present the reasoning for transgression of authority by increasing sales tax on petroleum products and treasury benches had assured to meet this demand in next one or two days.
The government expected to collect over Rs 45 billion in the current fiscal just because of the increase in GST on POL products provided POL prices would not tumble further.
