In a bid to assert its authority, the Senate Standing Committee on Finance on Thursday threatened to get the central bank governor Dr Reza Baqir arrested for his continuous absence from the committee meetings, which it said was creating problems in the smooth handling of parliamentary affairs.

“I will talk to the police chief and direct him to arrest the governor and present him before us,” warned Senate Standing Committee on Finance Chairman Senator Talha Mehmood.

The committee also took up the Tax Laws (Third Amendment) Ordinance 2021 for a vote and rejected most of the changes while pointing to the low quality of tax provisions.

The governor had been called in response to a complaint made by Iraq ambassador about hurdles in the way of operating a dollar-denominated bank account.

While showing his annoyance over the governor’s absence, Mehmood tore apart a letter that Baqir wrote to seek permission for his absence from the meeting. The letter was shown to the committee by a director-level officer of the bank only after the committee showed its extreme displeasure.

“When the ambassador of a country shows up, it means that the foreign government has shown up and yet the governor did not come to attend the meeting,” said Pakistan Muslim League-Nawaz (PML-N) Senator Dr Musaddiq Malik.

Senator Kamil Ali Agha, who belongs to the PML-Q, urged the committee chairman to move a privilege motion against the SBP governor for his absence from the meeting.

The committee directed the SBP to issue instructions to Habib Bank Limited to accept dollar deposits from the Iraqi embassy and resolve the issue within a couple of days.

Read Reza Baqir under fire in NA over rupee fall

The standing committee discussed the Tax Laws (Third Amendment) Ordinance clause by clause, which the government promulgated in September. The ordinance is already in force and the government has now presented it to parliament for getting permanent legal cover.

The standing committee rejected the imposition of sales tax on online platforms with a majority vote after the PML-Q decided to side with the opposition.

The decision to impose taxes on online platforms would kill a new opening for the digital revolution and would also close the doors to investments in digital platforms, said Musaddiq Malik.

The committee unanimously rejected the legal provision under which the government had authorised the Federal Board of Revenue (FBR) to disconnect gas and electricity connections of the people who were not registered with the board.

“The decision to disconnect gas and electricity connections will result in an uprising in the country,” warned PTI Senator Mohsin Aziz.

“Why only gas and electricity, the government should also disconnect water supply to the people,” said Malik.

The meeting took place a day after FBR Chairman Dr Mohammad Ashfaq admitted that the tax machinery did not have the capacity to bring those people to the tax net that were registered with it but were not filing tax returns.

The committee took a strong exception to the government’s decision to reduce sales tax to 14% only for the big steel melters of the country. “It is a shameless exhibition of capitalism,” said Malik.

The standing committee rejected the decision of compulsory digital mode of payment by the corporate sector.

But FBR Member Policy Afaque Qureshi argued that the compulsory digital payment was a very critical provision for the documentation of economy.

Although the FBR introduced the legal amendment with effect from September 16, it has not yet been able to enforce it as the country’s businesses are not prepared for such drastic changes where even use of banking instruments is now prohibited.

Read more SBP digitises regulatory approval process

The government has introduced the digital mode of payments without first plugging the loopholes that led to the creation of black money like the difference between market values and FBR values of properties, agricultural income tax exemption and tax-free foreign remittances.

The standing committee also rejected the government’s move to give taxpayers’ data to the National Accountability Bureau (NAB) and National Database and Registration Authority (NADRA).

After the amendment, NAB can now reopen the past and closed transactions of the last 20 years. The opposition parties have alleged arm-twisting by the anti-corruption watchdog on behalf of the government.

The standing committee turned down the legal provision to empower the FBR to disconnect mobile phones, electricity and gas connections of non-filers of income tax returns.

The government should also tax oxygen and hang people instead of introducing ridiculous legal provisions, said Talha Mehmood.

But the member policy argued that people should be put behind bars for not filing the returns, urging the committee not to reject these proposals.

The standing committee also rejected the decision to slap 35% additional income tax on electricity bills of non-filer lawyers, dentists, doctors, accountants, engineers, architects, IT professionals, tutors, trainers and other persons engaged in the provision of services.

“It is a way of harassing people,” said Mohsin Aziz.

The standing committee rejected the decision to give income tax exemption to Pakistan Mortgage Refinance Company, directing the FBR to explain reasons behind giving the exemption.

“If we are not satisfied, the matter of giving tax exemption to the refinance company will be referred to the Federal Investigation Agency,” said Mehmood.

Published in The Express Tribune, November 19th, 2021.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.