ISLAMABAD: The reformed general sales tax (GST) bill is unconstitutional under Article 144, as it needs resolutions passed by each provincial assembly that authorise the federal government to collect GST on the their behalf, the Senate’s Standing Committee on Finance has said.
The Senate body meeting was held on Monday to discuss the RGST and finance bills laid in parliament on November 12.
Pakistan Today observed that the committee Chairman Senator Ahmed Ali, Senator Safdar Abbasi, Senator Waqar Ahmed Khan, Senator Ishaq Dar and Senator Syed Javed Ali Shah were absent from the proceedings.
While agreeing with former senator Anwar Bhinder, who was invited to assist the committee on legal issues, the members said all provinces had their own sales tax laws and any legislation in this regard would be unconstitutional if the federal government was not allowed by the provinces to collect taxes.
Senator Professor Khurshid Ahmed said the federal government should not act in haste to get the legislation approved, otherwise it would be challenged in court and be declared unconstitutional. “The bill needs in-depth study, but the government is desperate to get the bill passed from us at gunpoint in 2010, which is against the norms of democracy and governance,” Professor Khurshid said.
“Under the 18th Amendment, provinces do not allow the federal government to legislate over issues falling under the provincial jurisdiction and the government has tabled the bill in violation of the constitution,” Khurshid added.
“All issues pertaining to inter-provincial matters such as GST or Value added Tax (VAT) in any federation are debated for a long time. A similar issue in India was debated for over two years and the consensus between the states and the Indian federation evolved after lengthy debates. VAT in the US has not been imposed in 49 states and if imposed in any of them, it is in highly diluted form,” he said.
Earlier, Anwar Bhinder exposed the lacunas in the bill and said the RGST bill was moved in violation of Article 144 of the constitution and resolutions from all provincial assemblies would be mandatory if the government wanted to get the bill passed by parliament. PML-Q Senator Haroon Akhtar said the government had other options also if it wanted to generate revenue.
“Agriculture sector accounts for 22 percent of the GDP but its tax share is one percent in the national economy. The government has failed to document the transactions of billions of rupees in the real estate business,” the PML-Q senator added.
“There will be no need of RGST if the government imposes taxes on the agriculture sector and real estate business,” Akhtar added.
ANP Senator Ilyas Bilour said the new sales tax would broaden the corruption base instead of the tax base.
“Everybody knows how fake invoices for refunds worth billions of rupees are embezzled in FBR,” he said.
