The Supreme Court listened on Monday requests that challenge the imposition of a super taxes on forecasting funds, with a constitutional bank of five members led by Judge Aminuddin Khan questioning if such tax is justified when the Income Tax itself is exempt.
During the hearing, Judge Muhammad Ali Mazhar cited section 53 of the Income Tax Ordinance, which provides exemptions, and asked if a trustee could be treated as private property.
Judge Hasan Azhar Rizvi warned that repeated super fiscal deductions could erode the retirement benefits over time, observing that an initial tax could grow significantly and reduce the expected payments of employees.
Judge Rizvi also questioned how an anticipated super tax could be calculated, a concern resonated by Judge Mazhar, who said that early payments would be difficult without the final gain figures.
The additional attorney general argued that the second schedule grants exemptions, including super taxes, but argued that the Government can impose additional levies if tax needs arise.
The lawyer Astma Hamid replied that the forecasting funds enjoy a legal relief and that a super tax contradicts the legislative intention.
The Bank pointed out that the responsibility for paying super taxes is mentioned in the relevant schedule, but questioned whether the government can impose a tax when the income tax itself cannot be applied.
Read: SC questions super taxes ‘Load on common man’
Later, the lawyer of the Federal Income Board (FBR) Hafiz Ehsan began brief presentations, saying that he would help the Court by legal and constitutional points and adopted arguments already presented by Hamid.
Judge Muhammad Ali Mazhar urged the lawyer to complete the arguments on key issues at the next hearing. Hafiz Ehsan requested only ten more minutes, but Judge Aminuddin Khan said that the session could not continue due to the other commitments of a judge, which caused the postponement.
The audience was postponed until Tuesday.
The requests challenge the legality of the super tax imposed on certain sectors, arguing that the constitutional authority of the Government exceeds.
Super taxes
Super taxes is an additional tax on high -income individuals, companies and industries, largely addressed to large corporations. In the Federal Budget 2022–23, the Government imposed up to 10% of Super Tax on the main sectors, including cement, steel, sugar, oil and gas, fertilizers, banks and textiles, citing the need to increase additional income for economic stabilization.
The requests that challenge the tax have been submitted to the Superior Court by individuals and organizations. At the previous hearing, the Bank was informed by the FBR that no one had challenged the verdict of the Superior Court of Lahore (LHC), maintaining the legality of the super fiscal imposed under section 4C of the Income Tax Ordinance, 2001, while reducing its 10% to 4% rate for sectors of 16, including banking and presentation of partial requests to the petition.
Earlier this year, the Apex Court questioned whether the center could distribute the super fiscal income to the provinces, noting that although the tax has been extended since 2016, funds for the declared purpose had not been used.
Read more: Supreme Court CB Questions Distribution of Super Prosecutors to Provinces
In a recent hearing, the bank expressed concerns about the impact of the super tax on common citizens, Judge Mazhar observed that if it was a cement bag or a shipment of liquefied natural gas, “the entire burden is reduced to common man.”
“Business will flourish, if we facilitate things for people,” he added.
“Do not discourage taxpayers: when they do, people end up leaving the country,” Judge Commandkhail had warned, similarly.
Hamid had clarified that only 15 sectors with income greater than RS3 billion were responsible for the super taxes and that no company had claimed an inability to pay. The bank pressed to the FBR to explain why distinctions between taxpayers were created, and emphasized that budgetary measures should not change the load to the public.
