Sindh asks Centre to allow provinces to collect GST on goods

July 20,2017

Sindh Chief Minister Syed Murad Ali Shah has said he has been requesting the federal government to hand over the collection of the general sales tax on goods as well to the provinces because the...

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Sindh Chief Minister Syed Murad Ali Shah has said he has been requesting the federal government to hand over the collection of the general sales tax on goods as well to the provinces because the consumers were closer to them.

This he said while talking to the country representative of the International Monetary Fund (IMF), Tokhir Mirzoev, who called on him at the CM House on Wednesday. Those who attended the meeting included Principal Secretary to CM Sohail Rajput, Finance Secretary Hassan Naqvi and two officers of the IMF. The provinces have already been collecting GST on services.

The IMF country representative discussed the economy of Sindh, development activities and fiscal relations between the provincial government and the centre. He also discussed the IMF report released recently in which emphasis had been laid on the usage of federal funds more sagaciously, particularly for the social sector, and simultaneously the provincial government should enhance its own resources.

The chief minister said his government had achieved almost all its tax collection targets through the Sindh Revneue Board (SRB) and Excise & Taxation Department, but only the Board of Revenue remained a little behind in achieving its target.

“The SRB achieved the target of Rs78 billion while the excise department collected over Rs52 billion,” he said. He added that the agriculture income tax target had been increased from Rs650 million to Rs1 billion. “We are introducing reforms in agriculture income tax and hope we would be able to achieve the target of Rs1 billion,” he said.

The chief minister said the total provincial receipts were Rs199.626 billion, and the major chunk of Rs627.3 billion came from the federal government. “We are trying to increase our own resources.”

He further stated that mostly the federal government failed to achieve its recovery targets; therefore, major shortfalls occurred in the federal transfers to the province, which badly affected the cash flow of the provincial government.

Shah said he had repeatedly requested the federal government to allow the provincial governments to collect sales tax on behalf of the Centre for onward distribution among the provinces as per their agreed shares. “I am sure the provincial governments would be able to collect more than the targets given to them by the federal government because they are very close to the consumers,” he said, adding that the federal government was reluctant to do so.

He said that under the new policy, the provincial government had devolved the property tax to the local councils and it had a great scope and potential to enhance the recoveries. “This would definitely strengthen the financial position of the local councils.”

He said that he had tried to develop a better fiscal policy under which the budget was released in time and special attention had been given to social sectors such as education Rs202 billion, which was 24 percent higher than the last financial year’s. Similarly, the health sector has been given Rs100.32 billion, which is higher by 25.5 percent than last year’s.

Shah said that for the first time Rs14 billion had been allocated for maintenance and repair of infrastructure. “This means not only is the government is reconstructing the new infrastructure, but it is also giving special attention to maintaining the building and road network.”

The IMF country representative said that fiscal management was the most important for a provincial government. “The provincial government is doing better, but even then study of the entire financial system is necessary for future planning and management,” he said.

On this, the chief minister urged him to support the provincial government for the purpose, and directed the finance secretary to hold a meeting with the IMF country representative in Islamabad and assign the study as suggested by IMF.


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