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Thursday, May 27, 2010

Centre and Sindh fail to resolve differences on VAT

* PM to convene another meeting in three days to resolve issue
* Balochistan govt says tax should be collected by Centre

By Sajid Chaudhry

ISLAMABAD: Differences between the federal and the Sindh governments could not be resolved over the implementation of Value Added Tax (VAT) in its integrated form, at a high-level meeting chaired by Prime Minister Yousaf Raza Gilani and attended by chief ministers of all provinces to develop a consensus, sources told Daily Times on Wednesday.

The sources said the Sindh government would not budge during the meeting from its stance of collecting tax on services, adding that the prime minister would convene another meeting in three days to resolve the stalemate. Punjab Finance Minister Tanveer Ashraf Kaira expressed hope that the issue would be resolved amicably in the forthcoming meeting. He called VAT “the tax of the future” and said it should be implemented as it would help the government document the economy and broaden the tax base.

Tax collection: The Balochistan government was of the view that it lacked the infrastructure to collect VAT on services. Thus, the tax should be collected by the federal government and distributed among the provinces through the divisible pool, it added.

However, the federal government has already given assurances to the International Monetary Fund (IMF) that integrated VAT would be implemented from July 1, 2010, but the Sindh government has been insisting on collecting the tax on services.

Meanwhile, a statement issued by the Prime Minister’s Secretariat after the meeting stated that the prime minister chaired a meeting of all chief ministers to discuss the upcoming budget proposals at the Prime Minister’s House.

The meeting reaffirmed the need for domestic resource mobilisation as well as the proposed Value Added Tax replacing the existing General Sales Tax system. It was decided to reconvene the meeting to finalise proposals prior to the budget announcement.

Courtesy www.dailytimes.com.pk

 

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