ISLAMABAD – The provincial and federal governments have once again failed to sort out their differences on returning provincial budget surpluses and the imposition of the Reformed General Sales Tax (RGST) on services, and the agricultural income tax, an official source said on Friday.
The Finance Ministry convened a meeting with provincial finance secretaries on Friday to synchronise levying of the RGST on goods and services, and the agriculture income tax from the start of the next financial year, as well as to discuss the withdrawal of subsidy on agricultural tube-wells.
The provinces, said the source, evaded a firm commitment to the centre on returning their budget surpluses in order to decrease the fiscal deficit, which is at 5.5 percent of the GDP for the current fiscal year. However, they showed willingness to implement RGST on services in the next budget, provided certain irritants were removed.
The provinces assured the centre that they would restart work on refining the draft law for the imposition of RGST on services, agriculture income tax and real estate sectors, which fell under the provincial domain. The provinces proposed lowering the RGST rate from the proposed 15 percent to 10 percent for the sake of wider acceptability, the source said.
