The Supreme Court's Constitutional Bench on Tuesday questioned whether the super tax imposed on high-earning individuals would continue indefinitely.
A five-member bench, led by Justice Amin-ud-Din Khan, was hearing a set of petitions challenging the super tax imposed under Section 4C of the Income Tax Ordinance, 2001.
During the proceedings, Justice Muhammad Ali Mazhar raised concerns about whether the super tax—originally introduced for a specific purpose—would persist indefinitely.
Makhdoom Ali Khan, representing the petitioners, informed the court that the government first introduced the super tax in 2015 through the Money Bill to fund rehabilitation efforts in areas affected by Operation Zarb-e-Azb. Initially meant as a one-time measure, the tax remained in place until 2022. He added that while the government initially aimed to collect Rs80 billion, there is no clear record of the total revenue generated.
Justice Jamal Khan Mandokhail inquired whether any records existed regarding the total amount collected under the tax. Khan responded that no finance minister had ever disclosed these figures in budget speeches.
Justice Mandokhail further observed that the super tax was intended for the rehabilitation of those affected by military operations and questioned the government’s resettlement plan, including whether a PC-1 had been prepared and cost estimates calculated. He also raised legal concerns over whether a money bill could be used to impose taxes on services.
Makhdoom Ali Khan argued that income tax was already levied on revenue and that the government had effectively introduced an additional tax under the guise of a super tax. He also pointed out that social welfare had been devolved to the provinces, making this a tax beyond the intended scope of federal authority.
Justice Amin-ud-Din Khan expressed concerns about the allocation of funds from the national consolidated fund without provincial consent.
In response, Federal Board of Revenue’s counsel Raza Rabbani defended the tax, stating that the war against terrorism was ongoing and that victims continued to be displaced. However, Khan questioned why the government stopped collecting the super tax in 2020 if terrorism had not ended.
The Supreme Court subsequently adjourned the hearing until Wednesday.