Standing Committee Backs Sales Tax on Welfare Hospitals 

The developments underscore ongoing efforts to ensure equitable tax practices and financial accountability across healthcare institutions in Pakistan.

ISLAMABAD: The Senate Standing Committee on Finance, led by Senator Saleem Mandviwala, has thrown its weight behind the decision to impose sales tax on charitable and welfare hospitals, overturning longstanding exemptions. The committee’s support comes amidst heated debates over tax obligations and financial transparency in these institutions.

During the meeting, Senator Saleem Mandviwala emphasized the need for rigorous auditing of hospitals benefiting from tax exemptions, citing instances where funds allegedly weren’t utilized as intended. Senator Farooq H. Naik raised concerns about high fees charged by doctors and laboratories associated with trust hospitals.

Officials from the Federal Board of Revenue (FBR) informed the committee that while government hospitals adhere to tax regulations, many private trust hospitals do not pay sales tax despite their substantial operations.

Meanwhile, the committee has summoned Finance Minister Muhammad Aurangzeb for further discussions, highlighting the urgency of addressing these financial policies. Senator Farooq H. Naik underscored the committee’s commitment to finalizing recommendations, urging the finance minister’s prompt attendance.

The developments underscore ongoing efforts to ensure equitable tax practices and financial accountability across healthcare institutions in Pakistan.

Senate Committee Rejects 18% Sales Tax on Baby Milk

ISLAMABAD: The Senate Standing Committee on Finance rejected a proposal to impose an 18 percent sales tax on baby milk, citing significant public health and economic concerns.

The meeting, chaired by Senator Salim Mandviwala, featured passionate discussions on the state of Pakistan’s economy and tax policies. Senator Farooq H. Nai highlighted the challenge of documenting the economy when a large portion of the population lacks bank accounts.

Officials from the Federal Board of Revenue (FBR) proposed a 10 percent sales tax on stationary items and an 18 percent sales tax on milk and baby formula, along with cash assistance for the needy. However, Senator Sherry Rehman argued that with a 40% stunting rate in the country, increasing the tax on baby milk was unreasonable and lacked prior consultation. Senator Anush Rehman described the proposal as cruel, leading the committee to unanimously reject the tax on baby milk.

Senator Farooq H. Nai also called for the abolition of the proposed tax on stationary items, criticizing the widespread imposition of taxes and humorously noting that even graves in Karachi are paid for, thankfully without IMF involvement. Senator Anush Rehman questioned if FBR’s tax policies were influenced by the IMF, particularly regarding tax exemptions for regions like Fata and Pata. She raised concerns about the perceived tax burden on Punjab.

Senator Salim Mandviwala criticized the misuse of tax exemptions intended for raw materials, revealing that these materials were being sold to local manufacturers instead. Senator Zeeshan Khanzada suggested that Azad Kashmir’s tax exemption should be accompanied by industrial development rather than merely offering government jobs.

Read More: Public Outcry Prompts Govt to Reconsider Tax Rates: on Salaries, Exporters, and Baby Milk

In a related discussion, Senator Anush Rehman condemned the imposition of an 18 percent tax on surgical instruments, arguing that it would make healthcare more expensive. FBR officials explained that surgical instruments were previously tax-exempt but are now subject to the new tax rate.

The committee’s decisions reflect growing concerns over the impact of taxation on essential goods and services, and the broader implications for Pakistan’s economy and public welfare.