Senate body irked by black marketing of currency notesArchive
ISLAMABAD: The State Bank issued fresh currency notes worth Rs68 billion in June/July for Eid-ul-Fitr but these ended up in the black market, the Senate Standing Committee on Finance observed on Wednesday.
Expressing concern, chairman of the committee Senator Saleem Mandviwalla said it was SBP’s responsibility to ensure fresh currency notes are not sold at a premium.
“Can we have a mechanism against this practice of selling fresh currency notes in open market before Eid-ul-Fitr?” he questioned.
The committee unanimously condemned the banking sector regulator in this regard.
Deputy Governor SBP Riaz Riazuddin said there was an extraordinary high demand of currency during the last fiscal year and 30.5 per cent increase was witnessed in ‘currency circulation’.
“The SBP issued Rs68bn new notes of Rs10 to Rs500 denominations. If we include Rs1,000 and Rs5,000 denominations, the worth goes up to Rs290bn,” he said.
Total currency in circulation up to June 30, 2016 was Rs3.33 trillion which does not include the currency that was kept in banks. However, neither the committee members nor the SBP could explain the reasons for rising demand for cash circulations.
However, a member — requesting not to be named — said the main reason for rising currency in circulation was the withholding tax on banking transactions for non-filers.
“Now people prefer to deal in cash rather than becoming a filer. There is no way out as long as the corruption and mismanagement in the FBR is not controlled,” he added.
The committee was briefed on the tax collections for the last fiscal year 2015-16 and targets for 2016-17.
The committee expressed concern over low share of direct taxes in total tax collection of the Federal Board of Revenue. It stressed on taking measures to bring new tax payers instead of burdening those already in the tax net.
“There is a two per cent fall in direct taxes during the last fiscal year,” the senator said.
Chairman FBR Nisar Khan said out of Rs127bn budgetary measures in the current fiscal year, Rs105bn are related to direct taxes.
He said the FBR was taking measures to penalise non- filers. Increasing the cost of doing business is a measure to get non-files to become filers, he added.
Mr Khan complained that people are not ready to pay taxes. Citing the example of traders, he said various schemes were launched on their requests but they are not ready to file their returns.
The committee members said tax payers complained of harassment and insults from tax officials.
Responding, the FBR chairman said many business segments considered tax notices as harassments and indulged in tax evasion.
Published in Dawn, August 25th, 2016