The Federal Constitutional Court (FCC) has issued formal notices to respondents in a series of review petitions filed by the Federal Board of Revenue (FBR) concerning the legal validity of the Income Support Levy Act, 2013. A two-judge bench, led by Justice Amin-ud-Din Khan, announced the decision on Tuesday after previously reserving judgment on the matter. These cases were transferred to the FCC from the Supreme Court following the enactment of the 27th Amendment, which granted the FCC exclusive jurisdiction over matters requiring constitutional interpretation. The move marks a significant early proceeding for the new court as it reassesses a levy that has been a point of contention between the state and taxpayers for over a decade.
Originally enacted via the Finance Act of 2013, the Income Support Levy imposed a 0.5 percent charge on the net moveable wealth of individuals exceeding Rs1 million. The proceeds were intended for poverty alleviation programs, but the act was repealed just a year later in 2014. Historically, both the Sindh High Court and the Lahore High Court struck down the levy, declaring it ultra vires (beyond the legal power) of the Constitution. The courts argued that the levy lacked the fundamental characteristics of a tax and created an unreasonable, discriminatory classification among taxpayers. Furthermore, because it was not classified as a “money bill,” its passage through the National Assembly alone—without Senate approval—was deemed a violation of Article 70 of the Constitution.
A critical point of the previous Supreme Court judgment, which the FBR is now seeking to review, was the lack of a legislative mechanism to ensure the funds reached their intended social objective. Without a specific “expenditure charge” designation under Article 81, the collected amounts would simply merge into the Federal Consolidated Fund, becoming indistinguishable from general government revenue. The FCC will now determine if these constitutional shortcomings can be reconciled or if the prior rulings by the High Courts and Supreme Court will stand. The bench has directed its office to fix the cases for hearing immediately after the notice period concludes, setting the stage for a definitive ruling on the state’s power to implement social levies through finance bills.
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