Centre, provinces fail to overcome differences

Centre and provinces failed to narrow down differences on General Sales Tax (GST) on services and agriculture income tax at the meeting of the National Finance Commission on Friday. The meeting decided to constitute two committees to resolve inter provincial dispute on collection of GST on services and imposition of uniform agriculture income tax in provinces to enhance their revenue generation. The meeting reviewed implementation of NFC Award for the second half of last fiscal year 2010-11 and performance during July-November period of current fiscal year 2011-12.
An official source said while chairing the meeting finance minister Abdul Hafeez Shaikh said there were concerns of other provinces on collection of GST on services by Sindh province. He urged that a solution of the dispute must be found. Punjab and Khyber Pukhtoonkhwa had challenged collection of GST on services by Sindh claiming that there were input adjustment issues that need resolution. Implementation of GST on services in integrated mode was on the agenda of the meeting. However, finance minister Sindh denied responding to concerns of Punjab and Khyber Pukhtoonkhwa saying that it was a provincial matter and it could not be discussed at NFC forum. Talking to reporters after the meeting, finance minister Hafeez Shaikh said the meeting was attended by finance ministers of all the four provinces. He said during the second half January-June period of the last fiscal year, federal government transferred Rs807.08 billion to provinces under NFC award. He termed the 7th NFC award as a historic development, as the share of provinces in revenues has been increased to 57.5 per cent and federal share reduced to 42.5 per cent. The provinces are being transferred additional revenues to increase spending on education, health, municipal services and law and order to improve the living standard of their population. Finance minister of Punjab Kamran Michael said that he raised the concerns of Punjab on collection of GST on services by Sindh. He termed collection of GST on services by Sindh as disputed as he claimed that the largest numbers of consumers, who use and pay the cost of services were residing in Punjab and the province should have share from the collection.
He said that he had lodged a complaint on the delay in the release of monthly NFC share installments to Punjab as it was forcing the province to borrow that was increasing its overdraft. He said the meeting constituted a committee to resolve issues on GST on services. He said provincial finance secretaries committee would look into ways to increase revenue from agriculture income tax.
Finance minister of Khyber Pukhtoonkhwa Humayun Khan said the province received Rs25 billion last fiscal year against the net hydel profits and during the current fiscal year they have received Rs12.5 billion under the net hydel profit. He said the province also received Rs15 billion during the last fiscal year as compensation for losses suffered due to war against terrorism.
Balochistan finance minister Mir Asim Kurd said they were getting revenue share under the 7th NFC award. He said development funds allocated to Balochistan projects remains unutilised and lapse at the end of fiscal year. He said they have lodged a complaint to the President and Prime Minister.