Fiscal Incentives

An interesting development in the Parliament is on the controversy surrounding fiscal incentives.

The Finance Minister, in line with the Fiscal Incentives (FI) of 2010 and 2013, had recently presented the 2016 fiscal incentives in the Parliament as a report for information along with the Budget, which was separately treated as a Money Bill.

The assumption made by the Ministry of Finance based on precedence and its reading of the 2011 Supreme Court tax verdict and tax laws was that it had the right to give incentives or tax breaks, as it was not the same as altering tax rates, which needs parliamentary approval.

However, this precedence and assumption was corrected by a combination of the Finance Committee, Speaker and also the Opposition.

Ultimately the National Assembly resolved that based on the Constitution, Public Finance Act and a more complete reading of the Supreme Court verdict the incentives will be treated as a money bill.

So far so good, as the NA is right in saying that the FI by every legal definition and evidence is a money bill. It is a sign of our maturing democracy that such issues are pointed out.

The only issue was that the incentives were already in effect from January 2016 and the so the FI was supposed to apply retroactively.

The Finance Minister requested for the retroactive application of the FI from January 2016 otherwise money would have to be paid by various businesses for 17 months.

The Opposition sensing a political opportunity said that there should be no retroactive application.

This is a case of the pot calling the kettle black as the same Opposition as the ruling government brought in FI’s in 2010 and 2013 as reports without having to be passed as money bills.

The Constitution grants the cabinet or the executive limited law making powers in the form of executive orders to ensure that the government functions in between sessions.

An obvious solution here is for the NA to acknowledge mistakes have been made in good faith by all sides and allow for the retroactive application of the FI. The NA has the authority to do so in such cases.

On the other hand if the Opposition sticks to its guns then under that interpretation all FI from 2010 is illegal, opening a Pandora’s Box.

Hypocrisy is great fodder for comedy
 Mo Rocca