Differences between Punjab, Sindh over GST persist

NFC working group resents federal government’s attitude

LAHORE: Differences between Punjab and Sindh over the GST persist as a working group of the 9th National Finance Commission (NFC) on Monday strongly reacted to the non-serious attitude of the federal government after a joint secretary represented the Centre at the meeting without sharing the assigned working paper.

The consultative meeting also expressed serious reservations over the increase in the Capital Gain Tax (CGT) on real estate transactions without taking the provinces on board as the move had adversely affected their revenue targets and challenged the provincial financial autonomy.

However, Sindh’s proposal on integrating the General Sales Tax on Goods and Services at the provincial level presented in its working paper on ‘Devolved and Integrated Tax Structure’ was unanimously rejected by the meeting.

The participants were of the view that Sindh had not discussed the implications for the revenue stream. Furthermore, such integration, if required, should be at the federal level.

According to an official, who attended the meeting held at the Civil Secretariat, representatives of all the provinces disclosed that the revenue targets concerning stamp duties and capital value tax were being adversely affected as property transactions were almost halted. As a result, the provinces may fail to achieve their respective revenue targets set for 2016-17.

They unanimously decided to include the suggestion to ask the federal government to review the decision and always take all the stakeholders into confidence before making such decisions.

Sindh Chief Minister Sindh Murad Ali Shah, Punjab Finance Minister Dr Aysha Ghaus Pasha, Khyber Pakhtunkhwa Finance Minister Muzaffar Said, provincial finance secretaries, NFC members and a joint secretary from Federal Finance Division represented their respective governments.The joint secretary said the federal government was yet to prepare the assigned working paper on ‘Subsidy and Grants Rationalisation’ and sought one month’s time to share that with all the stakeholders.

On this, Murad expressed his anger, saying the next financial year should be made in accordance with the 9th NFC Award so that the provinces could get more resources for development projects. “The 9th NFC Award should be awarded by the end of this year so that provinces can make their budgets in the light of increased revenue received from federal devisable pool,” the official, quoting the chief minister, said.

The Punjab government presented the working paper on ‘Resources Mobilisation’. Additional Secretary (Budget) Saifullah Dogar in his presentation disclosed that the provinces had failed to achieve the 18.1 per cent revenue-to-GDP target fixed in the ongoing NFC Award, with the current figures standing at 14.6 per cent only.

It was suggested that a rationalised revenue-to-GDP ratio target should be set for the provinces in the next NFC Award so that accuracy could be achieved in maintaining economic growth of the country.

The Punjab government proposed fixing the target at 18.1 per cent during the next five years. The suggestion was appreciated and included in the set of the proposals for the 9th NFC Award.

However, Sindh’s proposal of integrating the Sales Tax on Goods and Services at the provincial level in its working paper on ‘Devolved and Integrated Tax Structure’ was unanimously rejected by the meeting.Muzaffar Said, who appreciated Punjab’s efforts for the consultative meeting, will present his working paper today (Tuesday).