Lawmakers Urge Govt to End Tax-Free Status of Charitable Hospitals, Schools

The Senate Standing Committee on Finance and Revenue on Tuesday proposed eliminating sales tax on educational stationery while simultaneously questioning tax exemptions enjoyed by charitable hospitals and educational institutions.

During budget discussions, lawmakers argued that taxation on stationery directly increases education costs for families. Senator Mohsin Aziz urged the government to reduce the sales tax rate on educational stationery items to zero, saying education should not become more expensive because of taxation.

The debate then shifted toward charitable institutions benefiting from tax exemptions under existing laws.

Senator Farooq H. Naek questioned whether hospitals and schools receiving tax concessions were genuinely operating on a non-profit basis, arguing that many institutions collect substantial fees and charges while continuing to enjoy tax benefits.

Officials from the tax policy department acknowledged concerns regarding large cash collections that often remain outside documented financial records.

Committee Chairman Saleem Mandviwalla noted that a previous recommendation to eliminate cash counters at such institutions had not been implemented due to resistance from influential stakeholders.

The chairman stressed that provisions granting tax exemptions should be reconsidered and called for stronger oversight to ensure transparency and accountability.

The committee’s proposals could significantly affect both education-related taxation and the treatment of tax-exempt institutions in the upcoming fiscal year.