KEY POINTS
- FBR defended the tax as a way to support local manufacturing and curb market distortion
- MQM’s Javed Hanif supported the tax, warning of risks to local industry
- In the Senate Committee, Senators slammed the government for policy contradictions
ISLAMABAD: Pakistan’s National Assembly Standing Committee on Finance and Revenue on Tuesday rejected a proposal to impose an 18% General Sales Tax (GST) on imported solar panels and photovoltaic cells, a move that had sparked widespread public concern.
During a session chaired by MNA Naveed Qamar, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial clarified that the proposed tax would not apply to fully assembled solar panels or photovoltaic cells, but rather to individual parts imported for local assembly.
He argued that the measure aimed to regulate the market and support domestic manufacturers.
However, the majority of committee members dismissed the rationale. Member Mirza Iftikhar criticized the quality of locally manufactured panels, calling them substandard and more expensive than imported alternatives.
“If we are serious about promoting renewable energy, taxing solar panels is counterproductive,” he said.
The committee voted down the FBR’s proposal, with the exception of MQM’s Javed Hanif, who submitted a dissenting note.
Hanif supported the tax, warning that without it, the local solar industry would collapse and Pakistan would become a dumping ground for cheap imported panels.
The FBR had defended the tax proposal by claiming that continued exemptions for imported solar equipment were encouraging unfair competition, enabling money laundering, and stifling the growth of the local solar sector.
The tax body warned that tax-free imports were hurting domestic manufacturers, who were already paying taxes on production.
Despite the FBR’s arguments, lawmakers stood their ground, emphasizing that taxing renewable energy products at a time of worsening climate conditions and energy shortfalls would be a step in the wrong direction.
They stressed the importance of keeping solar technology affordable and accessible to the general public.
Earlier, Chairman FBR had pointed out that the disparity in tax policy between imported and locally produced solar panels was distorting the market and discouraging local investment.
He suggested that applying a uniform tax structure would help level the playing field.
Separately, the pushback grew louder in the Senate Standing Committee on Finance, where Chairman Senator Saleem Mandviwala presided over a session to discuss budgetary proposals, including the solar tax and tax exemptions for Pakistan International Airlines (PIA) leasing new aircraft.
One of the most fiercely debated topics was the taxation inconsistency in the tribal regions of FATA and PATA.
Senator Mohsin Aziz lambasted the government for wavering policies, demanding consistency and clarity. “If we impose tax on FATA, let it stay. Don’t keep rolling it back,” he argued. “People no longer take our word seriously.”
Senator Zarqa Suhrawardy went further, accusing the government of “greenwashing.”
She argued that while the state preached environmental sustainability by announcing a carbon levy on petrol, it was simultaneously discouraging solar energy with fresh taxes. “It’s contradictory and hypocritical,” she stated.
Senator Ahmed Khan showed concerns that some importers were hoarding solar equipment purchased before the proposed tax, hoping to profit once prices spike.
The panel suspected the influence of powerful Independent Power Producers (IPPs), alleging that the solar tax was pushed to safeguard their interests.
Meanwhile, tax exemptions granted to PIA for leasing aircraft sparked further contention. Mandviwala criticized the selective policy, suggesting that if one airline receives relief, others should too, or else face legal scrutiny.
FBR officials defended the measure, saying the leased planes were treated as capital goods to help improve PIA’s financial standing.
