Meeting on reformed GST could not be held
Meeting on implementation of GST could not be held as a delegation could not reach Islamabad due to bad weather.
ISLAMABAD:
A meeting on the implementation of reformed General Sales Tax (GST) between the Centre and four provinces could not take place as Balochistan’s delegation could not reach Islamabad due to bad weather. However, informally those who did turn up discussed some issues.
The federal government had convened the meeting to sort out differences on reforms in existing sales tax laws and their implementation by October 1, as committed with the International Monetary Fund (IMF). The parties will now meet before the end of this week.
The government has committed to international donors that it will reform the existing GST system aimed at widening the tax base by plugging loopholes and bringing services under the tax net.
However, Sindh has taken a constitutional stance, saying it will not give up its right to collect GST on services, which is part of an integrated GST on goods and services plan, meaning collection of tax on goods and services under one roof.
The government is discussing various options to bring the Sindh province on board. It has proposed to give tax collection rights to Sindh on those services, which stand alone and do not need input tax adjustments.
The federal government like the IMF and World Bank is of the view that the right to collect sales tax on services cannot be handed over to provinces as certain services like telecommunications and banking are spread all over the country and require tax refunds.
On its part, Sindh has objected to distribution of tax on account of services, saying it generates more than 70 per cent of revenue on services, a claim challenged by the Centre and Punjab.
According to the federal government, the Sindh government’s share in any service is not more than 50 per cent and in private it says that the province’s average share is not more than 30 per cent by any standard. The federal government has proposed to form a separate tax pool to distribute revenue from services among provinces.
In Tuesday’s informal meeting, the three provinces and the Centre discussed ways of keeping the budget deficit, the gap between government’s income and expenditure, to 4 per cent of gross domestic product or Rs685 billion.
The federal government has estimated the budget deficit on the assumption that the provinces will generate a surplus of Rs167 billion or one per cent of GDP. However, the provinces have announced deficit budgets.
Published in The Express Tribune, August 4th, 2010.
A meeting on the implementation of reformed General Sales Tax (GST) between the Centre and four provinces could not take place as Balochistan’s delegation could not reach Islamabad due to bad weather. However, informally those who did turn up discussed some issues.
The federal government had convened the meeting to sort out differences on reforms in existing sales tax laws and their implementation by October 1, as committed with the International Monetary Fund (IMF). The parties will now meet before the end of this week.
The government has committed to international donors that it will reform the existing GST system aimed at widening the tax base by plugging loopholes and bringing services under the tax net.
However, Sindh has taken a constitutional stance, saying it will not give up its right to collect GST on services, which is part of an integrated GST on goods and services plan, meaning collection of tax on goods and services under one roof.
The government is discussing various options to bring the Sindh province on board. It has proposed to give tax collection rights to Sindh on those services, which stand alone and do not need input tax adjustments.
The federal government like the IMF and World Bank is of the view that the right to collect sales tax on services cannot be handed over to provinces as certain services like telecommunications and banking are spread all over the country and require tax refunds.
On its part, Sindh has objected to distribution of tax on account of services, saying it generates more than 70 per cent of revenue on services, a claim challenged by the Centre and Punjab.
According to the federal government, the Sindh government’s share in any service is not more than 50 per cent and in private it says that the province’s average share is not more than 30 per cent by any standard. The federal government has proposed to form a separate tax pool to distribute revenue from services among provinces.
In Tuesday’s informal meeting, the three provinces and the Centre discussed ways of keeping the budget deficit, the gap between government’s income and expenditure, to 4 per cent of gross domestic product or Rs685 billion.
The federal government has estimated the budget deficit on the assumption that the provinces will generate a surplus of Rs167 billion or one per cent of GDP. However, the provinces have announced deficit budgets.
Published in The Express Tribune, August 4th, 2010.