Hafeez gives tough message in polite words

In polite words of Finance Minister Abdul Hafeez Sheikh, the government gave a tough message in the National Assembly on Tuesday: not to let “vested interests” block a reform of general sales tax (GST) and “take a stand” about loss-making state enterprises.

Winding up a 12-day general debate on the new budget, the minister rejected fears of the parliamentary opposition and traders that a reformed GST, earlier proposed to be renamed as value-added tax, would increase prices, explaining that the move would actually reduce the tax rate to a uniform 15 per cent from the present 16 to 25 per cent but would document the economy without exemptions.

The budget for fiscal 2010-11, announced on June 5 and to be effective from July 1, has increased GST rates by one per cent to 17-26 per cent, but the government plans to reform it by October with a uniform rate of 15 per cent. “Then why the prices should increase?” the minister asked, pointing out that food items, health and education, would be free from the levy, which will be applicable to businesses with a minimum Rs7.5 million turnover annually.

Accusing unspecified “powerful people” of getting exemptions after the GST was introduced 20 years ago, he said those profiting from the status quo were opposing the reform and, “while speaking of the small people, want to benefit the big people”.

He asked parliamentarians to “let us make up our mind” and not to play politics over the issue. The minister evoked cheers from both sides of the house when he proposed formation of a parliamentary committee to have a consensus in deciding the future of loss-making enterprises in the public sector, which he said were neither themselves efficient nor were allowing others to enter their field. “We have to take tough decisions.”

Mr Sheikh said Prime Minister Yousuf Raza Gilani, who was present in the house at the time, had approved only a Rs3 billion bailout package for the loss-making Pakistan Steel Mills, instead of a recommended Rs25 million and any additional help would depend strictly on performance.

He asked advocates of imposing an agricultural income tax to use their “convincing power” with provincial governments because agriculture was a provincial subject, but said a committee would examine re-imposing wealth tax as the government had committed in the Senate.

The minister also announced government plans to make the Federal Bureau of Statistics “totally autonomous” in a few months so that its statistics could be trusted by the people.

Mr Sheikh advanced his arguments in his usual polite manner, but he seemed to have little patience for those unnamed cabinet colleagues who, according to leader of opposition Chaudhry Nisar Ali Khan, were using up to six government cars each though their entitlement was only one car.

“What can I say about them?” the minister wondered and said: “Those keeping six (government) cars should be shamed of themselves.”

The minister said the government had accepted 61 out of 71 non-mandatory recommendations made by the Senate about the new budget, including those relating to austerity and targeting subsidies.

After the minister’s speech, the house began a discussion on the charged expenditure of more than Rs5 trillion included in the demands for grants and appropriations which are not to be voted upon before the house adjourned until 11am on Wednesday.

The opposition leader earlier led a token walkout by his PML-N party to protest at what it regarded as unsatisfactory reply of Law and Justice Minister Babar Awan about the time of grants-in-aid for bar associations though the minister assured the house the required rules for such allocations had been followed.

RAJA-FAISAL SPAT:

At the start of the sitting, held after an hour’s delay, Water and Power Minister Raja Pervez Ashraf angrily rejected what he called false allegations of corruption levelled against him by PML-Q parliamentary leader Faisal Saleh Hayat on Saturday regarding rental power projects and waved three files which he said contained newspaper cuttings relating to charges of wrongdoing against the opposition member.

But Mr Hayat repeated his offer to face the minister’s threatened suit for damages in a court of law.

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