Tax on gas consumers: Provinces stake their claim on Rs84b GIDC collection

Say they have the right over the cess and ask centre to transfer the collected amount

ISLAMABAD:

Different provinces have asserted their right over proceeds coming from gas consumers and have fiercely resisted the federal government’s move to impose the gas infrastructure development cess (GIDC).

They have also called on the centre to release the Rs84 billion collected as cess to the provinces.

According to officials aware of the development, the provinces suggested that the levy and collection of GIDC may be immediately stopped and the amount received to date, estimated at about Rs84 billion and deposited in the federal government’s consolidated fund, may be transferred to them. This should in proportion to the production of natural gas by each of the province and in accordance with the tax collected from every province, they said.

The demands were raised in a meeting of the Inter-Provincial Coordination Committee (IPCC) held recently to settle a row between the central and provincial governments over issues pertaining to gas production, supply and tax receipts.

At present, Sindh is the biggest contributor to the gas production in the country and its share stands at 70%.

In the IPCC meeting, Sindh Chief Minister Qaim Ali Shah argued that the federal government had exhausted all remedies in relation to the GIDC and the verdict of the Supreme Court in that case was final.

“Therefore, the collected amount may be disbursed to provinces in accordance with the collection formula,” he said and expressed utter dissatisfaction with the lack of response to the correspondence with federal ministries. He pointed out that there were concerns pertaining to gas supply and the tax imposed that needed to be settled by the federal government.

“A major issue is the collection of GIDC from gas consumers and provinces are of the firm view that proceeds from the cess should be transferred to them,” he said.

However, the federal government appears to have turned down the demand of provinces as the National Assembly on Tuesday passed the Gas Infrastructure Development Cess Bill 2014 with an aim to generate funds for financing different energy projects.

Earlier, despite opposition from two major political parties – Muttahida Qaumi Movement (MQM) and Pakistan Tehreek-e-Insaf (PTI), the National Assembly Standing Committee on Petroleum and Natural Resources approved an amended GIDC bill in a bid to provide legal cover for tax collection and increase the burden on consumers. Parliamentarians of the Pakistan Peoples Party (PPP) did not attend the meeting.

A majority of the Pakistan Muslim League-Nawaz (PML-N) legislators gave their seal of approval to the amended GIDC bill to bail out the government and make available finances for gas pipeline projects including the Iran-Pakistan (IP) and the Turkmenistan-Afghanistan-Pakistan-India (Tapi) pipelines.

In 2011 when the PPP was in power, the imposition of GIDC led to filing of 3,500 cases against the government. In its ruling, the Supreme Court gave a stay order against the cess, saying it was a fee and not a tax.

Last year, the PML-N government introduced the GIDC Bill 2014 to provide legal cover for the tax collection. According to the government, the PPP, MQM and even PML-N had earlier supported the cess to finance the gas import projects as transmission and distribution companies required Rs300 billion for laying pipelines and the IP project needed Rs200 billion.

Published in The Express Tribune, May 23^rd, 2015.

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