News Paper: Business Recorder
ISLAMABAD (July 24 2010): The federal government has convened a high level meeting on July 27 taking all the political leadership on board to resolve the thorny issue of reformed general sales tax (GST) on services, necessary for broadening the tax base and generating ample resources to carry forward development agenda.
Sources told Business Recorder here on Friday that the meeting to be chaired by the Prime Minister, which will be attended by all four provincial chief ministers. The political leadership at the federal and provincial level would finally have to develop a broader consensus to settle the issue of reformed GST on both goods and services amicably, so as to save the IMF programme under which Pakistan has committed introduction of reformed GST from October 1, 2010, sources said.
Details revealed that a meeting of provincial finance secretaries held at Ministry of Finance with Secretary Finance Salman Siddique in the chair reviewed the overall fiscal position of the federal and provincial governments. The introduction of reformed GST also came under discussion. Finance Secretaries of Punjab, Khyber Pukhtunkhwa and representatives from Sindh and Balochistan participated in the meeting. The introduction of reformed GST emerged as a major issue due to the government commitment with the IMF to raise tax-to-GDP ratio by introducing integrated reformed GST on goods and services from October 1, 2010.
During the meeting, it was observed that any breakthrough on reformed GST on goods and services in integrated manner and collection rights with the FBR would greatly help in keeping the growth momentum intact. However, the province of Sindh is still reluctant to allow federal government to collect reformed GST on services and is still planning to collect reformed GST on services itself.
Sources said that Sindh has denied any agreement in principle with the federal government on introduction of integrated reformed GST. However, sources said that Sindh is also cognisant of the difficulties to be faced by the country on non-introduction of reformed GST in integrated manner on goods and services by the federal government.
According to an official, representative of Sindh has informed the meeting that entire situation would be brought to the notice of the political leadership of the province so as to take a final decision on reformed GST on services. During the meeting, it was informed to the provinces that they should maintain fiscal discipline to keep the expenditures within stipulated limits so that budget deficit could be kept at targeted level during the ongoing fiscal year. The meeting also stressed upon the provinces to help the federal government in its endeavours to increase tax-to-GDP ratio as the country needs domestic resources to reduce the reliance on foreign loans in the medium and long term.
During the meeting, Finance Secretaries of Punjab and Khyber-Pakhtoonkhwa have requested the Ministry of Finance and the Federal Board of Revenue (FBR) to resolve the issue of sales tax on services. The issue came to the light during a monthly meeting of Finance Secretaries chaired by Secretary Finance Salman Siddque held at the Ministry of Finance here on Friday. FBR Chairman Sohail Ahmed and his team of tax managers were also present in the meeting. Finance Secretaries of Punjab and Khyber-Pakhtoonkhwa represented their provinces whereas other senior officials of the provincial Finance Ministries of Sindh and Balochistan were also present.
Punjab and Khyber-Pakhtoonkhwa also pointed out that the FBR and the Finance Ministry should submit a resolution of the issue as telecom companies have started approaching the concerned authorities of Punjab and Khyber-Pakhtoonkhwa to obtain legal viewpoint on the applicability of sales tax on services.
Sources said that the representatives of the provinces would submit the update to their Chief Ministers for expected meeting on the reformed general sales tax (GST) on July 27, 2010. The Chief Finance Secretaries would take into account their political leadership into confidence on the issue of sales tax on services. So far, no decision has been taken as it was a preliminary meeting to discuss the issue of sales tax on services besides other financial issues. The provincial finance secretaries would also discuss the issue with their legal experts for submission of recommendations on the status of services on the reformed GST. The FBR officials informed the meetings about the necessity to introduce reformed GST from October 1, 2010, sources added
Sources told Business Recorder here on Friday that the meeting to be chaired by the Prime Minister, which will be attended by all four provincial chief ministers. The political leadership at the federal and provincial level would finally have to develop a broader consensus to settle the issue of reformed GST on both goods and services amicably, so as to save the IMF programme under which Pakistan has committed introduction of reformed GST from October 1, 2010, sources said.
Details revealed that a meeting of provincial finance secretaries held at Ministry of Finance with Secretary Finance Salman Siddique in the chair reviewed the overall fiscal position of the federal and provincial governments. The introduction of reformed GST also came under discussion. Finance Secretaries of Punjab, Khyber Pukhtunkhwa and representatives from Sindh and Balochistan participated in the meeting. The introduction of reformed GST emerged as a major issue due to the government commitment with the IMF to raise tax-to-GDP ratio by introducing integrated reformed GST on goods and services from October 1, 2010.
During the meeting, it was observed that any breakthrough on reformed GST on goods and services in integrated manner and collection rights with the FBR would greatly help in keeping the growth momentum intact. However, the province of Sindh is still reluctant to allow federal government to collect reformed GST on services and is still planning to collect reformed GST on services itself.
Sources said that Sindh has denied any agreement in principle with the federal government on introduction of integrated reformed GST. However, sources said that Sindh is also cognisant of the difficulties to be faced by the country on non-introduction of reformed GST in integrated manner on goods and services by the federal government.
According to an official, representative of Sindh has informed the meeting that entire situation would be brought to the notice of the political leadership of the province so as to take a final decision on reformed GST on services. During the meeting, it was informed to the provinces that they should maintain fiscal discipline to keep the expenditures within stipulated limits so that budget deficit could be kept at targeted level during the ongoing fiscal year. The meeting also stressed upon the provinces to help the federal government in its endeavours to increase tax-to-GDP ratio as the country needs domestic resources to reduce the reliance on foreign loans in the medium and long term.
During the meeting, Finance Secretaries of Punjab and Khyber-Pakhtoonkhwa have requested the Ministry of Finance and the Federal Board of Revenue (FBR) to resolve the issue of sales tax on services. The issue came to the light during a monthly meeting of Finance Secretaries chaired by Secretary Finance Salman Siddque held at the Ministry of Finance here on Friday. FBR Chairman Sohail Ahmed and his team of tax managers were also present in the meeting. Finance Secretaries of Punjab and Khyber-Pakhtoonkhwa represented their provinces whereas other senior officials of the provincial Finance Ministries of Sindh and Balochistan were also present.
Punjab and Khyber-Pakhtoonkhwa also pointed out that the FBR and the Finance Ministry should submit a resolution of the issue as telecom companies have started approaching the concerned authorities of Punjab and Khyber-Pakhtoonkhwa to obtain legal viewpoint on the applicability of sales tax on services.
Sources said that the representatives of the provinces would submit the update to their Chief Ministers for expected meeting on the reformed general sales tax (GST) on July 27, 2010. The Chief Finance Secretaries would take into account their political leadership into confidence on the issue of sales tax on services. So far, no decision has been taken as it was a preliminary meeting to discuss the issue of sales tax on services besides other financial issues. The provincial finance secretaries would also discuss the issue with their legal experts for submission of recommendations on the status of services on the reformed GST. The FBR officials informed the meetings about the necessity to introduce reformed GST from October 1, 2010, sources added
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