FBR vs CDA : Row leaves over 1,000 sanitary workers in crisis

Dispute, CDA’s non-payment of bills to contractors has left workers without salaries for past two months

ISLAMABAD:

Already harsh financial conditions for the family of 37-year-old Nasreen Bibi have worsened during the last two months. To add to her hardship, six members of her family completely depend on Nasreen.

Nasreen, a low-paid sanitary worker is employed by one of the private contractors engaged by the capital’s civic agency to perform cleanliness work at G-8.

As she falls in unskilled workers category, Nasreen is paid government’s approved minimum wage of Rs12,000 per month.

Nasreen is victim of an ongoing dispute among federal tax authority, the Capital Development Authority (CDA) and private contractors.

For sometime now, the CDA has contracted out sanitation work in seven residential sectors of Islamabad to private contractors.

Nasreen is not alone.

Some 1,050 sanitary workers in all are on the receiving end of the situation, and now they have threatened to go on strike.

The sanitation work at G-6, G-7, G-8, G-9, G-10, I-10 and the Fruit and Vegetable Market in I-11 is carried out by three private contractors.

FBR vs CDA

The Federal Board of Revenue (FBR) has recently asked the CDA that it should deduct a 16 per cent tax from the monthly bill of the contractors the authority pays against their services.

According to FBR the new tax will be applicable from July 2015.

However, the agreements signed by the CDA with the contractors in the past do not identify only a 10 per cent services tax the contractors already pay on their bills to the government.

In total, the CDA pays Rs336 million per annum to three contractors against sanitary services in the seven sectors.

The FBR has demanded around Rs53 million under the new tax.

After getting direction from the tax authority, the CDA informed the contractors about the new tax, which they have refused to pay.

In response, the CDA threatened that it would terminate the contracts and re-tender the work.

“There is no provision of 16 per cent tax deduction in our contracts signed with the CDA,” supervisor of a contracting firm, Ilyas Ghauri said. He said that the firms were already paying 10 per cent tax on monthly bills.

Ghauri said that almost 75 per cent of the bill was consumed in paying monthly salary of the sanitary workers, while 10 per cent to government in the shape of the tax.

“We are unable to pay further taxes under the given circumstances,” he said.

Ghauri said that the CDA could not terminate their contractors under the provisions of the agreements.

CDA Civic Management Director-General Ghulam Sarwar Sindhu said the authority was trying to resolve the matter.

“All taxes are incorporated in the NIT cost of the contract [specified in the contract], which is not mentioned in the signed agreement,” he said

Sindhu said that the CDA was working on a possibility of terminating contracts and calling new bids for the work, while another suggestion included taking up the matter with the FBR and to request it to waive off new tax for the time being.

CDA vs Contractors

The non-payment of salaries to the sanitary workers is due to the CDA’s dispute with the FBR as well as the fact that the CDA has yet to clear contractors’ bills of the last four months.

“We have resolved the issue of payment of outstanding bills,” said CDA Director Sanitation Sardar Khan Zimri. He said that allocations under that head were expected to be approved on Wednesday (today).

Meanwhile, Nasreen and hundreds of others like her are finding it hard to make ends meet.

“Now, I am finding it hard to arrange two meals a day for my family,” she said.

Published in The Express Tribune, May 4^th, 2016.