ISLAMABAD: Prime Minister Yousaf Raza Gilani has invited four provincial chief ministers to a meeting of the federal cabinet scheduled for Wednesday to evolve a consensus and resolve the ongoing controversy between the central and Sindh governments over implementation of the Value Added Tax (VAT), officials said.
Provincial chief secretaries and finance ministers will also attend the meeting. Differences between federal and Sindh governments over VAT could not be resolved in the last meeting held at the presidency on last Thursday and it was decided that Premier Gilani would call the chief ministers to evolve a consensus on the issue. A spokesperson for the prime minister confirmed to The Express Tribune that the chief ministers would attend the meeting at a special request of the premier and VAT would be one of the issues on agenda.
However, he refused to reveal other agenda items. In the last meeting, the Sindh government remained firm on its stance to collect VAT on services. In the last few weeks, a series of meetings have been held between officials of the finance ministry and Sindh government over the implementation of VAT in an integrated form. Adviser to Prime Minister on Finance Dr Abdul Hafeez Sheikh also met with Sindh Chief Minister Qaim Ali Shah last month and tried to convince him about the economic fallout of a failure to comply with this critical condition of the IMF.
Officials said approval of the VAT was also delayed by the National Assembly Standing Committee on Finance till resolution of the dispute between the federal and Sindh governments. Though VAT on services is a provincial issue, there was an understanding among all the federating units that the Federal Board of Revenue (FBR) would collect the tax on their behalf. And the reason for this understanding was that only an integrated application of VAT could be feasible.
Published in the Express Tribune, May 26th, 2010.
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