Power tariff raise on CCI agenda today

Fears rise ahead of plan to reform taxati­on system before crucia­l meetin­g of Counci­l of Common Intere­sts.

Resurgent friction among provinces has triggered fresh fears about the fate of a key plan to reform the taxation system ahead of a crucial meeting of the Council of Common Interests (CCI) on Monday (today).

A failure to finalise legislation to introduce the Reformed-General Sales Tax (RGST) can potentially endanger Pakistan’s multibillion dollars economic bailout package with the International Monetary Fund (IMF). The CCI, which is a constitutional body that comes into action to settle disputes between the federation and the province and within the federating units, is holding a significant meeting to approve a plan of action on the basis of which the government wants multilateral and bilateral donors to assist Pakistan’s ailing economy. Prime Minister Yousaf Raza Gilani is expected to chair the meeting.

The government last week sought more time for further talks with IMF-led lending agencies to make another attempt to evolve consensus among provinces—especially between Sindh and Punjab—on the RGST, a condition the fund demanded the Pakistan government must meet. Both sides would return to negotiations on the 13th of this month and before that the administration would have to decide whether it can implement the new taxation system or not.

“The RGST will be discussed there. Let’s see what is decided,” Punjab Finance Minister Tanveer Ashraf Kaira told The Express Tribune from Lahore, signaling that there hadn’t hitherto been any consensus on the issue.

A top official in the secretariat of Gilani also said the CCI would have to confront diverse arguments by the two largest provinces on who should be allowed to collect sales tax on services and what mechanism for its utilisation should be adopted.

Until recently, both provinces have been locked into bitter infighting not only within themselves but also with the federal government. Though the government last week gave an impression that it had succeeded in breaking the deadlock and an R-GST bill would be presented in the National Assembly, officials said they weren’t sure it could happen so easily. “There can be a twist in the tail … let’s keep our fingers crossed for surprises and shocks,” an official said, declining to publish his name because of the sensitivity of the matter.

The CCI would also be preparing a plan for a meeting of Pakistan Development Forum (PDF) on the basis of a Damage Need Assessment (DNA) on losses caused by this year’s floods. Another official at the premier’s secretariat said the government would make a plan what to demand from the PDF—a consortium of multilateral and bilateral donors to help Pakistan revive its economy—and prioritise projects.

The council is also likely to take up a law that deals with setting up Special Economic Zones (SEZs) in various parts of the country.

Published in The Express Tribune, November 8^th, 2010.