Sindh Chief Minister Syed Murad Ali Shah, on Wednesday, asserted that with Pakistan moving forward in talks with International Monetary Fund (IMF), he believed the federal government would take on the issue of sales tax.
He hoped that it would comply with the constitutional position and ensure respect for the provincial autonomy guaranteed in the constitution of Pakistan.
In a letter to Prime Minister’s Advisor for Finance & Economic Affairs Dr Hafeez Shaikh, the chief minister quoted a news report that read ” The government has conceded to the IMF that the present arrangement of four provincial and one federal authority looking at goods and services tax has increased the cost of doing business in an exponential manner and large businesses have been complaining about the compliance cost.”
The government was said to have briefed the IMF, “In three years time, we will move to a single tax collection agency with single return and single auditing authority to cut down on compliance costs.”
CM Shah remarked that the news reported did not accurately represent the purpose of the talks held on the sales tax issue during Pakistan’s last mission to the IMF, earlier last month.
“Nevertheless, if that is not the case, the arrangement under contemplation would be contrary to the express stipulation of constitution of Pakistan, which, against entry No.49 of its fourth schedule (federal Legislative List) provides, `tax on the sales and purchase of goods imported, exported, produced, manufactured or consumed except for sales tax on services,” Shah added.
Reminding Dr Hafeez Shaikh, he continued, “Your good self, in your previous capacity as finance minister of Pakistan, has been a part of momentous changes that witnessed the transfer of collection of sales tax on services, initially, to Sindh in 2010, followed by other provinces.”
The chief minister further noted that Sindh had come a long way since the time it had assumed the collection of sales tax on services.
“We will be glad to see or be a part of any effort that leads to improvement in the overall tax collection system it the country, being an important stakeholder under the NFC scheme,” Shah continued.