The PPP has become a wall in the way of granting arrest powers to the Federal Board of Revenue in tax fraud cases. On Wednesday, the PPP refused to vote in favor of the new stringent powers, which resulted in a new round of talks between the two allies a few hours before the budget was approved.
Sources told The Express Tribune that the PPP top leadership had informed the government that it would not support granting arrest powers to the FBR despite checks and balances on the use of the new powers. Some additional safeguards were introduced to prevent misuse of powers during the review of the new budget in the Finance Committees of the National Assembly and the Senate, some of which were proposed by the PPP.
A senior PPP leader involved in the talks, who spoke on condition of anonymity, told The Express Tribune that despite the additional measures, the FBR cannot be trusted, the real issue is trust in the FBR. Sources said that Ishaq Dar contacted the PPP leadership on behalf of the government.
Sources told The Express Tribune that the top PPP leadership informed the government on Wednesday that it would not vote to give arrest powers to the Federal Board of Revenue, despite the new safeguards being included in them. The government cannot get the budget passed by the National Assembly without the support of the PPP. The government had proposed in the budget on June 12 that the FBR can arrest people in tax fraud cases. Additional safeguards were introduced to prevent misuse of these powers during the budget debate in the National and Senate Standing Committees on Finance.
These reservations were suggested by the PPP. Despite these additional reservations, the FBR cannot be trusted. A senior PPP official said that the real issue was trust in the FBR. Sources say that Deputy Prime Minister Ishaq Dar contacted the top leadership of the PPP on behalf of the government. Ishaq Dar told The Express Tribune that he has returned to Islamabad and we will resolve it soon.
Dar was in the United Arab Emirates. Dar said that he is in touch with President Asif Ali Zardari and other PPP leadership. The Deputy Prime Minister said that the issue of arrest powers will be addressed before the budget is approved.
During the discussion on the budget, the Chairman of the National Assembly Standing Committee on Finance, Syed Naveed Qamar, called the arrest powers strict.
When contacted, FBR spokesperson Dr. Najeeb Memon said that the updated bill has already been presented in the National Assembly by its Standing Committee on Finance and now the decision depends on the assembly. Unlike in the past when the government used to present the updated bill in the National Assembly, this time the Standing Committee secured the budget where the FBR also proposed additional revenue measures of Rs 36 billion.
In the budget, the government had proposed new tax measures worth a total of Rs 435 billion, which has now increased to Rs 463 billion after adjustments. Chairman FBR Rashid Langrial said that it is not correct to call the additional measures of Rs 36 billion a mini budget because the parliament has not yet approved the Finance Act.
FBR Chairman Rashid Langrial told the Standing Committee last week that tax fraud offences have been divided into two parts. In some cases, court permission will be required before arrest. He explained that under the Sales Tax Act, arrests for offences such as suppression of taxable supplies, suppression or non-payment of withholding tax for more than three months, dealing in goods liable to forfeiture and making taxable supplies without registration require court approval.
The Assistant Commissioner – or any officer authorised by the Board – may, with the approval of the Commissioner, initiate an inquiry, if there is material evidence indicating the commission of tax fraud or warranting prosecution of an offence under the Act. The inquiry officer shall have powers under the Code of Civil Procedure, 1908, of the Civil Court. The inquiry officer shall have to complete the inquiry within six months.
The Board may authorise a Commissioner to issue an arrest warrant through a three-member committee notified by the Chairman, if the tax loss exceeds Rs 50 million. Arrests will only be made if the suspect fails to respond to three notices, attempts to flee or is likely to tamper with evidence.
