The Sindh Assembly on Monday unanimously passed the Sales Tax on Services Bill-2011 Monday, enabling the provincial government to collect sales tax on services provided, received and consumed in the province.
Finance Minister Murad Ali Shah, while presenting the bill, announced that the Sindh government will start collection of sales tax on services from July 1, thereby marking the first time in history that provinces will collect and distribute the sales tax on services. The Sindh Revenue Board has already been constituted by the provincial government in preparation for this practice.
Chief Minister (CM) Qaim Ali Shah hoped that around Rs15 billion will be collected under the sales tax head, claiming that the practice of provinces collecting sales tax on services was strongly resisted by the Federal bureaucracy. Previously, he explained, the Federal government was collecting sales tax and distributing it among the provinces on population basis.
CM Shah said that when the Federal government collected sales tax, Sindh lost out on its funds since it was contributing around 70 percent revenue but was getting only 23 percent in return based on the formula of distribution on population basis.
The CM said in the 18th Constitutional Amendment, sales tax on services was accepted as a provincial subject. Similarly, he added, the under the 7th National Finance Commission Award, the Federal government has reduced its share by 44 percent, granting the provinces share by 56 percent of the Federal Divisible Pool. In this way, he added, Sindh will get around Rs50 billion from the Pool.
The finance minister explained that this was not a new tax, as the Federal government was already collecting it and nor were the rates being changed. The only difference is that the provincial government will now be collecting it.
MQM’s parliamentary leader, Syed Sardar Ahmed, added that it has been decided that the provincial government would not impose any new tax in the forthcoming budget.
Other political parties, including those from the opposition, also supported the bill, terming it as advancement to provincial autonomy. PML-F’s Marvi Rashdi, however, said that it will be called an achievement after it is fully implemented, and provides benefits to the common folk.
The house also passed Sindh Civil Services (Regularization of absorption) Bill-2011, which provides legal cover to the services of those employees who were absorbed in the provincial government from different department and bodies of the Federal government. Members of the PML-F and PML-Q opposed the bill, but it was passed with majority vote.
PML-F’s Marvi Rashdi termed the bill “black law”, saying that the ruling parties were destroying the province for sake of accommodating only 15 officers. Nusrat Saher Abbasi, also from the PML-F, said that the rulers want to provide relief to their relatives through the bill. On other hand, she added, a summary is still pending at office of the chief minister regarding giving postings to those officers who had passed the Sindh Public Service Commission’s competitive examination.
Shaharyar Maher of the PML-Q said that the bill will have far-reaching negative repercussions on the province, since employees of Sui Gas, PIA and other Federal bodies were being regularised in the Sindh government but whose expertise was irrelevant in the provincial departments. “Everyone knows why these officers are being absorbed here,” he added.
PML-Like-minded member, Razaque Rahimoon, said that absorbing these officers will also be violation the court’s directives.
Provincial ministers belonging to the ruling PPP, however, rejected the criticism on the bill. Senior Minister for Education and Parliamentary leader of the PPP, Pir Mazharul Haq said that majority of these officers were given postings in the provincial government during the last tenure, when the PML-Q and PML-F were in government. He said that it will be unfair to send back these officera to their parent departments after they had spent many years here. Some of them were close to retirement, he added.
Sindh Law Minister, Ayaz Soomro also introduced two bills that would later be considered and passed. The bills include the Thar Coal Energy Board Bill-2011 and the Sindh Hotels and Restaurants Bill-2011.
