Senate panel calls for raising govt employees salaries, pension

ISLAMABAD: The Senate Standing Committee on Finance has asked the government to raise salaries of public sector employees by 10 percent for next fiscal year 2020-21.

The Senate panel also approved recommendation tabled by Senator Sherry Rehman for tabling all agreements of foreign loans before Parliament. The increasing debt and liabilities burden has become one of the major problems of Pakistan’s economy where debt to GDP ratio was almost touching 98 percent. The public debt and liabilities might cross 100 percent mark till end June 2020. The Senate panel also opposed 11 percent cut in shares of provinces under NFC Award.

The government had frozen the salaries and pension under the IMF demand to restrict non-development budget amid increasing fiscal indiscipline whereby the budget deficit and primary deficit was sky rocketing. The government is aimed at bringing budget deficit at 7 percent of GDP and primary deficit at negative 0.55 percent of GDP for next budget.

The Standing Committee on Finance and Revenues, which met under chairmanship of Senator Farooq H Naek here at the Parliament House on Monday recommended increasing Federal Excise Duty (FED) on cigarette sector by 100 percent. The government did not bring any changes through Finance Bill 2020-21.

Senator Kulsoom Perveen proposed to increase FED on cigarette sector for next fiscal year. She said that the national exchequer faced losses of Rs20 billon in the outgoing fiscal year. However, she did not mention anything related to illicit cigarette as it’s causing more losses to national exchequer.

Senator Barrister Ali Saif recommended increasing taxation on tobacco sector as he proposed to increase Rs30 tax on tier-1 brands and Rs10 on tier-II brands of cigarettes.

The Senate Committee also proposed reduction in tax on cement by 40 percent in order to boost up construction sector in the country. The FBR high-ups claimed that the tax was reduced in the budget and the tax machinery would have to face losses. Senator Sirajul Haq proposed Riba free economy. He also recommended doubling education and health sector budgets.

While deliberating on the various recommendations, the Committee allowed to companies involved in the manufacture of (Personal Protective Equipment (PPEs) and masks certain relaxations. Raw materials used in the manufacture of these products were exempted from Customs Duty for a year as well.

The senators’ proposed 10 percent raise in salaries of civil servants as well as the armed forces for next fiscal year. Sales tax on textiles was reduced to 4 percent. State Bank relief for PM Youth Programme was recommended. It suggested granting HEC more funds for assisting online university education all over the country.

Expediting the process of privatisation of ailing enterprises was recommended. The senators raised doubts about the ability of FBR for achieving next fiscal year’s target of Rs4,963 billion. The senators proposed to FBR to revise downward the annual target.

Dr Hamid Ateeq Sarwar informed the Senate panel that the tax machinery was confident of achieving the revenue collection target of Rs960 billion set for the first quarter (July-September) for 2020-21.

During the first quarter of 2020-21, it is estimated that the FBR would be able to collect Rs850 billion. However, more efforts would be required to move from Rs850 billion to Rs960 billion by the end of first quarter of 2020-21.