The Supreme Court questioned the management of the Federal Income Board (FBR) of the case of Super Taxes, with Judge Muhamad Ali Mazhar observing that “the entire burden is reduced to the common man.”
A Constitutional Bank of five members, headed by Judge Aminuddin Khan, made requests challenging the imposition of super taxes by the Government of the Pakistan Muslim League (PML-N) in 2015 to raise funds for people displaced by the ZARB-E-AZB operation.
Upon listening to the arguments of Asthma Hamid of FBR lawyer on Friday, the court held the impact of the tax on common citizens.
Hamid reported the bank that two paragraphs in the decision of the Superior Court of Islamabad (IHC) contradicted each other; One declared that taxes would not be applied and the other allowed it.
Judge Hasan Azhar Rizvi commented that the super taxes was causing the loss of companies and questioned the policies that affect the elderly.
Read: No taxpayer challenged LHC prosecutors that exceeds super taxes, the Supreme Court tells FBR
The bank also examined the deductions of the forecasting funds. Judge Mazhar asked if the funds arrived at the widows, while Judge Rizvi questioned whether the companies could transfer the amounts to other accounts if the widows were the net beneficiaries.
To this, Hamid replied that he could guide the court at legal points, but had no knowledge of losses or financial benefits.
Judge Mazhar commented that the procedures were becoming a problem of “I am being attacked” and highlighted procedural complications.
Given this, Hamid said that sections 4c and 9 of the Income Tax Ordinance, 2001, must be read together, with section 4c a complete section.
Section 4C of the “Income”, since the sum of debt profits, dividends, capital gains, brokerage and commission, while the taxable income as defined by section 9 refers to the “total income … of the person for the reduced year (but not below zero) for the total of any deductible subsidy … for the year.”
FBR Dr. Ishtiaq Interjection Member to add that the matter in question belonged to income, not to individual taxpayers.
Judge Jamal Khan Commandkhail sought clarity on the basis of the requests and questioned whether the objections were raised or arose formally after a notice of the display cause.
Hamid responded affirmatively to the latter and added that he was representing the FBR in another 20 pending cases before the court.
The bank asked about the tax rate, in addition to seeking to understand why sections 4c and 9 readings together would not cancel the definition of income or subsidies.
Hamid said the amendments to the law after the 1979 ordinance had already set the tax rate.
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 taxes imposed under section 4C of the Income Tax Ordinance, 2001, while reducing its 10% to 4% rate for the 16 sectors, including the bank and the supply of relief to requests for requests.
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.
