De­vo­lu­tion mag­net

The Pak Banker - - 4EDITORIAL - Ashan Subohi

SINDH pre­sented its case to de­volve the col­lec­tion of the sales tax on goods to the prov­inces in a Na­tional Fi­nance Com­mis­sion group hud­dle held last week to pre­pare for the 9th NFC Award meet­ing, which is ex­pected in the last quar­ter of this cal­en­dar year.

Ac­cord­ing to the in­for­ma­tion gath­ered, the pro­posal en­joyed the un­con­di­tional sup­port of Punjab but was op­posed by Balochis­tan, while Khy­ber Pakhtunkhwa pledged to back it af­ter its reser­va­tions were clar­i­fied. But to the cha­grin of the par­tic­i­pants from the three smaller prov­inces, the rep­re­sen­ta­tives of Punjab and the fed­er­a­tion missed the NFC group meet­ing.

The mem­bers from Sindh pre­sented the find­ings of their study on im­prov­ing the ef­fi­ciency of the tax ad­min­is­tra­tion for higher rev­enue gen­er­a­tion last week in a meet­ing of the group on 'de­vo­lu­tion on taxes - one of the four work­ing groups for the 9th NFC.

Sen­a­tor Salim Mand­wi­wala, Sindh's tech­ni­cal mem­ber who chaired the meet­ing in Karachi, said op­po­si­tion by the other smaller prov­inces to the pro­posal of de­cen­tral­i­sa­tion of sales tax col­lec­tion was rooted in their lack of un­der­stand­ing of Sindh's sug­ges­tions.

Sindh and Punjab are ready to give an un­der­tak­ing to the FBR to make up for any short­fall in its as­signed rev­enue tar­get for the col­lec­tion of sales tax on goods - Sindh's tech­ni­cal mem­ber Sen­a­tor Salim Mand­wi­wala

"They prob­a­bly thought we wish to de­volve the sales tax regime. But we are not. We are ask­ing the fed­eral gov­ern­ment to al­low the prov­inces to col­lect the sales tax for them and evolve a sys­tem of in­cen­tives for the prov­inces for ex­ceed­ing the tar­gets as­signed by the Fed­eral Board of Rev­enue," Mand­wi­wala told Dawn over phone from Is­lam­abad.

"We col­lected the ser­vice tax more ef­fi­ciently. The Sindh Rev­enue Board has a proven track record. It has ad­vanced tech­nol­ogy and a bet­ter team of tax col­lec­tors," he as­serted.

"Sindh and Punjab are ready to give an un­der­tak­ing to the FBR to make up for any short­fall in its as­signed rev­enue col­lec­tion tar­get," he said. "The pledge in­di­cates the con­fi­dence of the two prov­inces on their ca­pac­ity to de­liver bet­ter than the ar­chaic and cor­rup­tion-rid­dled struc­ture of the FBR."

He feared that the de­lay in the ap­point­ment of the seat va­cated by Punjab's tech­ni­cal mem­ber Aye­sha Ghous, who as­sumed the charge of the province's fi­nance min­is­ter, could de­lay the fi­nal­i­sa­tion of the 9th NFC award.

Kaiser Ben­gali, a lead­ing mem­ber of Balochis­tan's NFC team, said over phone from Quetta that "we would re­sist an at­tempt to de­stroy the fed­eral fi­nan­cial struc­ture. We are for a fair and eq­ui­table dis­tri­bu­tion of re­sources among the fed­er­at­ing units, but are not aim­ing to snatch all the re­sources of the fed­eral gov­ern­ment to make it im­po­tent".

"There are huge tech­ni­cal prob­lems in­volved in tin­ker­ing with the sales tax regime. It is not prac­ti­cal to de­volve the sales tax, which en­joys con­sti­tu­tional pro­tec­tion," he said.

His team op­posed Sindh's idea, and he also crit­i­cised the ab­sence of the key mem­bers of Punjab and the fed­eral gov­ern­ment from the group meet­ing. An in­sider said Balochis­tan ac­tu­ally did not have the ca­pac­ity to col­lect the sales tax. "Sindh's pro­posal, if ac­cepted, would ex­pose their soft belly and that was the real rea­son for their re­luc­tance," he said.

"The po­si­tion that a province takes de­pends pri­mar­ily on its per­cep­tion of how is it go­ing to pan for its in­ter­ests. All of a sud­den the Balochis­tan team was found cham­pi­oning the cause of the fed­eral gov­ern­ment. It would be naïve to as­sume that it cares more than oth­ers for the fed­er­a­tion," com­mented another mem­ber of the NFC.

Kam­ran Rehman, a mem­ber of the KP team, sounded op­ti­mistic. "The reser­va­tion ini­tially ex­pressed by our team was over the modal­i­ties. We did en­dorse the pro­posal once it was clar­i­fied that it in­volved just the col­lec­tion and not the tax it­self," he told this scribe over phone from Peshawar.

"The KP group has been tasked to as­sess the ef­fi­ciency of public spend­ing in the coun­try and sug­gest ways to im­prove the util­i­sa­tion of scarce re­sources. It is a data-based study for which we need data from the other prov­inces. We have dis­patched re­quests to Sindh, Punjab, Balochis­tan and the fed­eral gov­ern­ment," he said.

He also lamented the fed­eral gov­ern­ment's 'cross­ing over into the fi­nan­cial ter­ri­tory of the prov­inces'. He men­tioned the ad­vance in­come tax that is as­sessed on the value of as­sets, in­clud­ing prop­erty and ve­hi­cles, which are both pro­vin­cial sub­jects.

At­tempts were made to so­licit the fed­eral gov­ern­ment views on the Sindh's pro­posal and why its mem­bers opted out of the group meet­ing, but Fi­nance Min­is­ter Ishaq Dar and the fi­nance sec­re­tary were not avail­able.

They were in Nepal for the Saarc fi­nance min­is­ter meet­ings.

"It is lame to read too much into the ab­sence of the fed­eral team in a NFC group meet­ing. The fed­eral gov­ern­ment val­ues fi­nan­cial de­vo­lu­tion and would like to look through all the sug­ges­tions to im­prove re­source mo­bil­i­sa­tion. It is un­fair to ques­tion the mo­tive and the di­rec­tion of the Nawaz Sharif gov­ern­ment at ev­ery turn," a se­nior of­fi­cer of the fi­nance min­istry de­fended the gov­ern­ment.

The May 2015 NFC meet­ing had ex­tended the 8th NFC Award by a year. It had also con­sti­tuted four groups, each led by a province, to clar­ify cer­tain is­sues be­fore the fi­nal­i­sa­tion the 9th NFC award. Sindh was given the topic of de­vo­lu­tion of taxes. It was ahead of the oth­ers and com­pleted and pre­sented its part of the man­date last week.

The Punjab group, re­spon­si­ble for re­source mo­bil­i­sa­tion at the fed­eral and pro­vin­cial lev­els, has re­port­edly cir­cu­lated its draft pro­pos­als among the NFC mem­bers and is ex­pected to call the meet­ing early next month. KP is said to be wait­ing for the other prov­inces and the fed­eral gov­ern­ment to re­spond to its re­quest for ex­pen­di­ture data; the task for the Balochis­tan group has yet to be spelled out.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.