Consensus on 32 recommendations


June 28 - July 04, 2004





The Senate in its week-long session completed its debate and review of the Finance Bill 2004-05 and decided with a consensus to transmit to the National Assembly, 32 recommendations/amendments for consideration and incorporation in the budget 2004-05 provisions. The National Assembly has yet to pass the budget. Under the constitution, Senate can only review and make recommendations to the National Assembly.

During the budget debate in the Senate, the treasury benches have moved 88 recommendations, democratic alliance 31 and MMA 83 recommendations. After debate and consultation they developed a consensus on 32 recommendations.

Responding to the questions by many members from the opposition including those belonging to MMA, the Finance Minister ruled out the possibility of sharing the details of defense expenditure with the members. "The defense expenditure has never been discussed in the parliament before nor it can be done now due to National Security, he added. The opposition senators had moved a motion to freeze the defense budget rejecting the motion to outright, the Finance Minister declared that these would be no cut in the defense expenditure and the government will provide all the necessary funds to make the country's defense stronger. Winding up the debate in the Senate, he said that the government was making all possible efforts to make country economically stronger with a strong defense. The budget is relief, growth and investment-oriented and would generate job opportunities. The budget proposes to provide relief to all segment of population and incentives to all sector of economy.

Opposition members, however, challenged the argument advanced by the Finance Minister that breaks up of defence expenditure cannot be disclosed in the parliament due to National Security. Senator Farhatullah Baber of PPP wondered how national security could be jeopardized if the house was given a broad break-up of military spending in terms of allocation for the Air-Force, the Navy and the Army and the break-up in terms of salary and modernization of equipment. Professor Ghafoor Ahmed and Professor Khurshid Ahmed demanded the defense budget should also be discussed in the house.

The 32 recommendations of the Senate have been transmitted to the National Assembly for its consideration. Last year, the Senate sent six proposals, which were rejected by the National Assembly within few minutes. It is, however, expected that this time the National Assembly will not be so harsh and would show due respect to the upper house. It is hoped that most of the recommendations of the Senate would be accepted. The Senate recommendations have been finalized by the Senate Committee on Finance under the Chairmanship of Senator Ahmed Ali.

Chaudhry Anwer Bhinder and Kamil Ali Agha of the PML, Ishaq Dar, Dr. Safdar Abbasi, Dr. Akbar Khawaja of the Democratic Alliance and Professor Khurshid Ahmed of the MMA supported recommendations of the Senate Committee on budget. Out of 32 recommendations, 13 recommendations deal with amendments in the Finance Bill and the remaining are general recommendations.



The approved general recommendations suggested that the limit of taxable income may be raised from rupees 80,000 to Rs. 120,000 allowing a minimum of rupees 10,000 monthly tax free income to individuals.

The Pay and Pension Committee may consider increase of 20% for BS 1 to 15 and 12.5% for 17 and above.

The Senate committee recommends that the duty on part of a computer should be 0% while on the finished products the duty should be 5%.

The Senate committee recommends the Pay and Pension Committee should look into the proposal of giving ad-hoc dearness allowance for government servants who retired prior to 1994 and those who retired after 1994 at the rate of 25% and 15% respectively.

The Senate committee recommends that the price reduction of DAP fertilizer should also be extended to all kinds to fertilizer so as to benefit the farmers.

The Senate committee recommends that CBR should remove the existing anomaly in duty and tax pertaining to cosmetics.

The Senate recommends that in view of the fact that provinces are burdened with loans; the committee of the Finance Ministry looking into this matter may hike the interest rate paid by provinces to the weighted average interest rate. Accordingly relief be given to provinces with provision to liquidate their loans from other sources. The Senate committee recommends that in future GST at 15% should be rationalized at 12% by broad basing this tax.

The Senate noted the increase in the budget for education sector. However, it is recommended that in future allocation for this sector should at least be 2% of the GDP.

The Senate committee recommends that parliament should be taken into confidence about foreign loans and its mechanism to the Finance Committee of both the Houses.

The Senate recommends that austerity measures should be adopted in respect of government advertisements depicting their achievements to save valuable funds.

The Senate committee recommends that amount allocated for PSDP should be disbursed at least on quarterly basis, if required for the project. The Senate recommends that Sales Tax or any other tax levied on motorcycles should be abolished.

The Senate committee recommends that the rate of interest on agriculture loans, which are timely paid, should be reduced to 8% in general and 7% for those who make prompt repayment.

The Senate recommends that exemption from customs duty should be extended to the import of diagnostic kits especially for Hepatitis B, C and HIV.

It has been represented that as the National Finance Commission's 6th Award has not yet been announced and Balochistan Government is under the debt of Rs. 4 billion to State Bank of Pakistan, and new budget has increased salaries of government employees and the provincial government is facing difficulties under the NFC's 5th Award, the Senate therefore, recommends that this matter be decided by the NFC judiciously. The Senate recommends that budget making process should be thoroughly reviewed to ensure greater and effective participation in it of both the Houses of Parliament.

The Senate committee recommends that the proposed budgetary allocation of Rs. 652 million should be for Foreign Faculty Hiring including Pakistani faculty working abroad.