The Senate Standing Committee on Finance and Revenue has voiced strong opposition to the proposed increase in General Sales Tax (GST) on smaller vehicles, including those with 850cc engines, from 12 percent to 18 percent. The committee, currently in its fifth consecutive session deliberating the Finance Bill 2025 and the Annual Budget Statement, discussed proposals to reduce the tax hike to a more moderate 14 percent or 15 percent.
The session, chaired by Senator Saleem Mandviwalla, saw the participation of Federal Minister for Finance Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani, FBR Chairman Rashid Mahmood Langrial, and other senior officials from relevant departments.
Concerns Over Inequity and Burden on Small Car Owners
Committee members expressed serious concern over the significant jump in GST on smaller vehicles, arguing that such an increase would disproportionately affect lower and middle-income segments of the population who rely on these cars for their daily commute and livelihoods.
Senator Shibli Faraz specifically highlighted a perceived inequity in the government’s approach. He pointed out that while tax relief and incentives are being extended to certain regions or sectors, owners of smaller, more affordable cars continue to face a heavy tax burden. This sentiment resonated with the committee’s overall aim to ensure fairness in the taxation system.
Commendation for Participatory Budget Review
Despite the contentious nature of some tax proposals, Senator Mandviwalla lauded the overall conduct and active participation of committee members during the budget discussions. He emphasized that the collaborative and transparent nature of engagement this year signifies a process that is truly reflective of the public will.
The committee’s recommendation to moderate the GST increase on smaller cars reflects a clear intent to balance revenue generation with public welfare, particularly for segments that are more sensitive to price fluctuations. The final decision on this and other tax proposals will be made as the Finance Bill 2025-26 progresses through Parliament.
