Govt’s proposal to restrict provinces from collecting GST on services dismissed

KARACHI: Former advisor to chief ministers of Sindh and Balochistan Dr Kaiser Bengali has opposed the government’s proposal with regard to restricting the provinces from collecting general sales tax (GST) on services after the creation of a federal tax commission. He termed the move “against the spirit of the 18th Constitutional Amendment” which provided provincial autonomy.

Addressing a press conference along with Pakistan Institute of Labour Education and Research (PILER) Executive Director Karamat Ali at the Karachi Press Club on Monday, Dr Bengali said that the federal government should abolish 15-20 divisions and ministries, which would reduce the current federal expenditure.

Dr Bengali, who remained a member of the National Finance Commission (NFC) from Balochistan, said that the provinces were performing very well in the collection of GST on services, whereas the Federal Board of Revenue (FBR) had miserably failed to achieve its tax collection targets.

“The 7th NFC Award transferred GST services to the provinces and thereby strengthened provincial fiscal autonomy. Punjab and Sindh do have a strong agricultural and industrial base, but Khyber Pakhtunkhwa and Balochistan do not. It is thus proposed to add a fifth criterion to the horizontal distribution formula: inverse of the cultivable area. This will tilt the distribution balance somewhat towards the two economically weaker provinces,” he stated.