TNN Pakistan

In Pakistan, the Senate’s Standing Committee on Finance has opposed the increase in tax rates on electric and hybrid vehicles, while rejecting the request to reduce Federal Excise Duty (FED) and other taxes on fruit juices.

Key Points from the Meeting

• Electric and Hybrid Vehicles: The Federal Board of Revenue (FBR) briefed the committee about the tax on imported electric vehicles. Senator Faisal Vawda highlighted the global encouragement for electric vehicles and expressed concerns about policy revisions causing problems for those whose shipments arrive after policy changes. The FBR Chairman informed that a 25% sales tax is imposed on vehicles priced over 15 million PKR, which Vawda criticized, noting it discourages industrial investments in the country. The committee postponed the decision on vehicle taxes but opposed increasing taxes on electric and hybrid cars.
• Property Excise Duty: The FBR Chairman mentioned the imposition of excise duty on plots, which led to questions from Farooq H. Naek about the legal grounds for this tax, as plots do not fall under goods or services. Naek pointed out that such a tax could be legally challenged.
• Fruit Juices: The committee declined to lower taxes on fruit juices. Representatives from the juice industry reported that their turnover had significantly decreased due to high taxes. Despite their plea to reduce taxes to 10%, the committee maintained that the tax burden on the industry is ultimately passed on to consumers. The FBR Chairman clarified that no new taxes were imposed on fruit juices in the current finance bill and that last year’s taxes were the concern.
• Cigarettes: In a discussion on cigarette taxes, the FBR Chairman noted a 40% reduction in formal sector production despite increased taxes, indicating that tax hikes have not deterred smoking. FBR’s efforts in confiscating non-tax-paid cigarettes were highlighted, with 400 million sticks seized this year compared to 140 million last year. Measures to seal shops selling smuggled cigarettes were discussed, with Senator Sherry Rehman supporting strict enforcement.

Read Also: Peshawari Shakar Cola: A Refreshing Summer Delight in Rawalpindi

Summary

The Senate’s Standing Committee on Finance meeting, chaired by Saleem Mandviwalla, involved significant discussions on various tax policies. The committee opposed increasing taxes on electric and hybrid vehicles, aiming to promote environmentally friendly transportation. The request to reduce taxes on fruit juices was rejected, with emphasis on the consumer bearing the tax burden. The legality of excise duty on plots was questioned, reflecting concerns about the extension of tax laws. Discussions on cigarette taxes underscored the challenge of reducing consumption through fiscal measures alone.

Overall, the committee’s decisions reflect a balance between encouraging eco-friendly practices, ensuring fair taxation, and addressing the economic impacts on various industries.