Company lawyers conclude arguments during supertax case hearing before FCC
ISLAMABAD:
Lawyers for exporters and tobacco companies argued before the Federal Constitutional Court (FCC) on Monday that excessive taxes are forcing companies to move out of the country.”
A three-member bench of the FCC, headed by Chief Justice Amin-ud-Din Khan, resumed hearing the super tax case at its temporary premises – the Islamabad High Court (IHC).
During the hearing, the lawyer for several exporting companies, Rashid Anwar, completed his arguments, while Ijaz Ahmed, representing the tobacco companies, also concluded his arguments.
Lawyer Anwar told the court that the IHC had previously ruled that the tax could not be levied at less than 15 per cent or more than 55 per cent.
However, he stated, taxes exceeding 55 percent are currently collected. He argued that excessive taxes are forcing entrepreneurs to move their businesses to low-tax jurisdictions like Dubai, as current tax rates leave little room for profit.
He said exporters currently pay up to 61 percent in taxes. Lawyers for the tobacco companies argued that from a retail price of Rs 130 per packet of cigarettes, Rs 98 is collected as tax, while a packet sold for Rs 48 carries a tax burden of Rs 40.
Responding to these claims, Federal Board of Revenue (FBR) lawyer Asma Hamid said the figures presented by the petitioners did not match the official records. The petitioners also argued that the government had selectively imposed supertaxes on certain sectors and exempted others.
Justice Amin-ud-Din Khan observed that it is at the discretion of the government to include or exclude any sector from taxation. The petitioners argued that tax classification should be based on income and not business sectors.
The court noted that if taxes were levied solely on income, sectoral classification would not be possible. The hearing was adjourned and will resume today.
The controversy surrounding Sections 4B and 4C of the Income Tax Ordinance 2001 constitutes one of the most significant fiscal and constitutional disputes in the recent history of Pakistan.
It involves tax implications running into hundreds of billions of rupees and raises fundamental questions about the taxing power of Parliament, equality before law and the scope of judicial review in tax matters.
Section 4B was introduced by the Finance Act, 2015, which imposes a “super tax” on high-income earners, particularly banking companies and other earners with incomes exceeding Rs 500 million.
Laying out the background of the case, Hafiz Ahsaan Ahmad Khokhar, lawyer for the Federal Board of Revenue (FBR), told The Express PAkGazette that the tax was initially justified as a temporary fiscal measure aimed at generating funds for the rehabilitation of temporarily displaced people.
