The Supreme Court questioned on Monday the justification of the government behind the unexpected income tax, investigating whether ordinary price increases could be treated as extraordinary profits.
A Constitutional Bank of five members, headed by Judge Aminuddin Khan, heard arguments of the lawyer of the Peticionarios Ahmed Jamal Sukhera.
Judge Hassan Azhar Rizvi asked: “If gasoline increases from RS150 to RS200, would it be an unexpected gain? If sugar goes from RS160 to RS170, would that still tell?”
Sukhera argued that the tax unfairly attacked some sectors. “If three or four people benefit while most incur losses, how can taxes be imposed?” He said, pointing out contradictions in government policy and that the measure was driven only by the “unexpected profit policy.”
Judge Muhammad Ali Mazhar reminded him that constitutional safeguards have limits: “Article 10-A is a fair trial: what does that have to do with taxes?”
Sukhera insisted in taxes should involve public participation, arguing that the tax violated entry 47 of the Constitution, which governs the fiscal powers of Parliament.
Read: SC listens to a super fiscal challenge, FBR defends the power of Parliament
Judge Mazhar replied that, although some municipal taxes include such provisions, “the Income Tax Law does not have a clause on the public hearing.”
During the procedures, Sukhera commented: “Simplicity can also be a captivating charm”, which causes Judge Mazhar Bomae: “Perhaps this is its type of simplicity?” – Drawing laughs.
Making reference to his age, Sukhera said: “I am old now; my children are lawyers and sitting here.”
Judge Jamal Khan Commandkhail asked his age, and hearing “57”, commented: “Do you consider 57 old?” – causing more laughs.
Sukhera concluded: “One day, none of us will be here, but this judicial decision will remain.”
The Bank said that autonomous government institutions, including PIA and steel, were still included in a loss were included in the Super Tax List.
Read more: Super taxes under scrutiny in the Supreme Court
Judge Commandkhail observed that supervising these institutions is the responsibility of the Government, not of Parliament. The audience was postponed until Tuesday.
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.
Also read: 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.
