ISLAMABAD: Finance Minister Shaukat Tarin has rejected opposition's claims that new taxes have been imposed in the supplementary Finance Bill 2021 tabled in the National Assembly (NA) on Thursday, saying that only exemptions have been withdrawn.

Additionally, the newly-elected senator said the State Bank of Pakistan (SBP) autonomy bill, also tabled in the NA, will not compromise the national sovereignty of the country, contrary to claims by the opposition.

There was a ruckus during the NA session on Thursday, with opposition members chanting slogan against the government's handling of the economy, which they said had hiked inflation, and caused extra burden on the citizenry.

However, Tarin, briefing the media on the mini-budget along with Minister of State for Information and Broadcasting Farrukh Habib after the NA session in Islamabad, said that the International Monetary Fund (IMF) had demanded the removal of tax exemptions to the tune of Rs700 billion, which was reduced to Rs343 billion after negotiations.

He said that speculations regarding the Finance (Supplementary) Bill, 2021's impact on the common man are baseless, as it is just aimed at reviewing tax exemptions worth Rs343 billion.

“This does not mean that new taxes of Rs343 billion were being imposed — they were exemptions which were given to different sectors during a period of time.

"This includes tax exemptions worth Rs112 billion on machinery, Rs160 billion on pharma sector and Rs71 billion on the rest of the goods,” he said.

NA session adjourned after govt tables SBP amendment bill, 'mini-budget' amid ruckus

Tarin said taxes on machinery are refundable and adjustable, adding that these will be refunded within seven days and adjusted against other taxes, including sales tax and income tax.

“The same goes for pharma,” he said.

“As far as the Rs71-billion exemption is concerned, this is made up of luxury items including imported fish, steaks, branded items, high-end bakery items. The common man would only face taxes of Rs2 billion,” said the finance minister.

“I don’t think that the imposition of Rs2 billion in taxes would add to inflation,” said Tarin, adding that the purpose of removal of these tax exemptions is not to collect taxes, but documentation.

The federal minister said that no sales tax has been imposed under the bill on tractors, medicines, and fertilisers.

Talking about the SBP Amendment Bill 2021, the finance minister stated that the Pakistan Tehreek-e-Insaf (PTI) government believes in the autonomy of institutions.

“Previous governments heavily borrowed from the central bank at zero rates. At present, we have to pay Rs6.4 trillion to the State Bank,” he said.

"The present government has not borrowed a single rupee from the State Bank during the last two and a half years. The opposition's claims that our sovereignty will be compromised with this bill are not correct.

“Under the bill, the non-executive board of SBP will have the authority to make all decisions, including appointments of deputy governors, etc. Meanwhile, the board will be approved and nominated by the Government of Pakistan,” said Tarin.

“Thirdly, the SBP will be answerable to parliament, which is a positive development and will strengthen the parliament,” he said.

Earlier, Tarin moved the Finance (Supplementary) Bill, 2021 (mini-budget) as well as the SBP Amendment Bill 2021 in the National Assembly (NA).

The two bills, for long seen as thaws in the revival of the IMF programme, have invited severe criticism from the opposition.

Pakistan is desperately seeking the green light from the IMF in reviving the stalled $6-billion Extended Fund Facility (EFF). The IMF board is due to meet on January 12, and as per experts, the approval of the package would pave way for other international lenders to provide multi-billion dollars for the cash-deprived economy.

The article was first published in Business Recorder on December 30, 2021.