New board to collect Sindh sales tax

KARACHI: The Sindh Assembly took a stand against the federal government’s plans to impose Value Added Tax by unanimously passing a bill to establish the Sindh Revenue Board on Thursday. The bill regulates fiscal and economic policies, imposition of levies and collection of taxes and duties.

“We will not handover, now or in the future, the powers to collect tax on services to the federal government,” said Syed Qaim Ali Shah, Chief Minister of Sindh. “The Constitution’s fourth schedule clearly states provinces are to collect sales tax on services.” He said the Sindh government had convinced the centre, by referring to different clauses of constitution, that collection of sales tax by the federal government would be a violation of the constitution and against the spirit of provincial autonomy. Earlier the federal government had suggested collecting the tax, as the provincial government did not have enough resources and capacity to do so. “We refused, saying that we will enhance our capability on our own,” he said.

The supplementary bill, was not on the agenda but was moved by Provincial Law Minister, Ayaz Soomro.  According to the bill a minimum four-member board will be responsible for advice, where necessary, investigation or inquiry into suspected duty, or tax evasion, tax and commercial fraud. “It will be an autonomous body with a chairman and its members and will work under the pattern of the Central Board of Revenue (CBR) having income tax officers but it will function under the supervision of Sindh government,” said Shah. The board will also have an advisory council which will include the Chief Minister, Chief Secretary, Minister for finance, Minister or advisor to CM on planning and development, chairman of the board, secretary finance and other members co-opted by the board.  The government may also appoint two members from the private sector with expertise in taxation.

According to Shah up to 72 per cent of the country’s taxes are collected from Sindh, depending on the population. “Around Rs50 billion are collected from our province,” he said “but unfortunately only Rs3 billion is given back to Sindh.”

Published in the Express Tribune, June 4^th, 2010.