GST Bill: Govt postpones NA panel meeting

Centre, provinces unable to resolve dispute on tax on services.


Express December 07, 2010

ISLAMABAD: The government has postponed a crucial meeting of the National Assembly’s standing committee on finance to buy more time for consensus and that has delayed the process of drafting uniform federal and provincial general sales tax laws.

The meeting scheduled for Wednesday has been postponed indefinitely as the government has decided to ‘soothe certain elements’ before it moves to get GST bill passed from the panel and subsequently, the National Assembly.

After getting the pulse of trade bodies last week, the government had called the meeting for a clause-by-clause reading of the contentious GST bill and finally its approval from the committee.

Sources from within the Pakistan Peoples Party said that the government has envisaged a plan to get the bill passed but it did not want to rush, as it may be counterproductive in the post-GST scenario.

“The fear is that the protests led by the MQM in Karachi and PML-N in Punjab may somehow contribute to destabilising the government in the post-approval stage,” said one of the party’s top functionaries.

US Ambassador to Pakistan Cameron Munter visited MQM headquarters in Karachi on Monday in order to persuade the party to support the bill.

The decision to delay approval may have serious economic implications. The International Monetary Fund’s $11.3 billion bailout programme will lapse on December 31. Finance Secretary Salman Siddique recently said that Pakistan will seek a three-month extension in the programme provided the tax bill is approved by parliament.

The finance ministry has also carried out an exercise which estimates the deficit between government revenue and expenditure at over seven per cent of gross domestic product (GDP) – about Rs1.2 trillion – if the government fails to implement the GST.

Due to the postponement of the standing committee’s meeting, the federal and the provincial governments on Tuesday were also unable to evolve consensus on a uniform draft of general sales tax on services.

The finance secretary has already said that provincial GST laws would be finalised only after receiving the standing committee’s recommendations, which would be incorporated into the provincial drafts as well. The IMF is pushing for implementation of an integrated GST regime across the country.

It was expected that the government would seek the National Assembly’s approval for the RGST on goods by December 20 but the bill had to make its way through the standing committee on finance and revenue before seeking approval of parliament’s lower house.

The provinces also could not evolve consensus on seven disputed services.

Published in The Express Tribune, December 8th, 2010.

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