KARACHI, June 6: The Sindh Assembly on Monday unanimously passed into law the Sindh Sales Tax on Services Bill, 2011, enabling the provincial government to levy and collect sales tax on services from the financial year beginning on July 1.
Although no new services have been brought into the GST net, the Sindh government expects to generate a revenue of over Rs20 billion as compared to the past practice of receiving between Rs3 billion and Rs4 billion as 23 per cent share on a population criterion from the divisible pool against its 70 per cent share in tax collection.
Taking the floor before a general discussion on the bill, Chief Minister Syed Qaim Ali Shah termed it a very important bill for which Sindh had been contesting for the past many years to get back from the federal government its constitutional right of collecting sales tax on services.
He said it was extremely unfair on the part of the federal government to distribute 23 per cent from the divisible pool to Sindh on the population criterion despite receiving 70 per cent of the total tax collected from the province.
Mr Shah also acknowledged efforts of MQM parliamentary party leader Syed Sardar Ahmad who as a finance minister had fought for this constitutional right.
Recalling three major achievements of the government, the chief minister mentioned the acceptance of a multiple criteria instead of the one based on population, the federal government’s agreement to charge one per cent against four per cent for tax collection and the centre conceding that tax on services was the right of provinces. While it was very difficult to convince the other provinces and the federal government, they finally agreed at the NFC meeting held in Quetta in December 2009 that collection of sales tax on services was the right of provinces, he said.
However, he added, the bureaucracy continued to create hurdles until it was specifically mentioned in the 18th constitutional amendment bill that collection of sales tax on services was a provincial subject.
He recalled that this year the federal government had agreed to pay Rs15 billion to Sindh against its earlier share of Rs3 billion to Rs4 billion but so far only Rs12 billion had been paid. “We expect the collection of tax to be over Rs20 billion which will be utilised for the benefit of our people,” the chief minister said.
Following the speeches in support of the bill by Syed Sardar Ahmad, Razzaq Rahimoo, Marvi Rashdi and Ayesha Khoso and its clause-by-clause reading, when the bill was put to the vote it was unanimously passed into law after a minor amendment.
Earlier, Finance Minister Syed Murad Ali Shah speaking on the principles and objectives of the bill said with the passage of this bill, a longstanding issue would finally be resolved which could compensate for injustice meted out to the province for the last 11 years.
He said no new tax was being levied and the sales tax would be collected at the rate of 16 per cent from July 1 as was announced by the federal government.He added that the Federal Board of Revenue would collect tax on some services whose origin was yet to be determined and distribute 50 per cent of it to the province.
The finance minister recalled that the Sindh government had already established the Sindh Revenue Board to collect Sales Tax on Services.
On a motion tabled by Law Minister Ayaz Soomro under Rule 98 of the rules of procedure of the provincial assembly, the house allowed the leave to withdraw The Sindh Sales Tax on Services Bill (Bill No 5 of 2010) and introduction of a bill (No 19 of 2011) on the same subject.
The law minister also introduced The Thar Coal and Energy Board Bill, 2011 (Bill No 17 of 2011) and The Sindh Hotels and Restaurants Bill, 2011 (Bill No 20 of 2011).
The house later took up The Sindh Civil Servants (Regularization of Absorption) Bill, 2011 (Government Bill 16 of 2011) for consideration. The law minister said that in view of their experience and competence, certain employees with the approval of competent authority were absorbed in provincial government departments in the public interest. To protect such absorption by way of law, it was expedient to enact a law in the matter, he said.
However, Razzaq Rahimoo and Shaharyar Mahar of the PML(Q) opposed the bill, saying that it would deprive other officers of their right to promotion. Besides, they argued, the bill should not be passed in haste when a relevant case was in a court of law.
Syeda Marvi Rashdi and Nusrat Sehar Abbasi of the PML(F) declared the bill ‘a black law’ which would be a great injustice to the youth. This bill was brought to favour some blue-eyed functionaries of the government, she said.
Senior Minister Pir Mazhar-ul-Haq said those who had supported martial laws in the past were unaware of the powers of the elected assembly. He said these very officers had been inducted by the previous government that also had recruited some 7,000 people on a contract basis, but it was the present government that regularised the services of all contract employees.
Katchi Abadis Minister Rafique Engineer slammed the critics of the bill saying that those terming the bill a black law had “blackened the constitution by incorporating LFO (legal framework order) in it”.
Law Minister Ayaz Soomro said the government through this bill wanted to protect the services of those officers who had been inducted by the previous government from other institutions.
After a discussion when the bill was put to a vote, it was passed into law by a majority of votes.
Later, the house on a motion of the law minister granted extension of date for presentation of the reports of the standing committee on law and parliamentary affairs and human rights pertaining to four government bills up to the next session. These bills were regarding salaries, allowances and privileges of ministers, special assistants, legislators, speaker and deputy speaker of the assembly.The house also allowed extension of the date till Thursday of presentation of a report of standing committee on irrigation and power on resolution of Ghulam Mujadid Isran for recovery of arrears of power dues from consumers and a report of standing committee on the board of revenue on a substantive motion of Saleem Khurshid Khokhar regarding forged mutation of the record of rights of St Andrews Church.
After the agenda was completed, Marvi Rashdi of the PML(F) tried to move a resolution seeking an in-camera session of the assembly on law and order situation in the province.
The law minister opposed the motion and said there was no need of holding an in-camera session.
The speaker told the woman legislator that the issue of law and order could be discussed within a few days during the budget session.
During the day’s proceeding, need to initiate action against those patronising criminal activities was highlighted by MQM ministers Dr Saghir Ahmad and Faisal Sabzwari repeatedly.
Recording their protest over what they described as government failure to take any action on an FIR lodged against the alleged kidnapping, wrongful confinement and torture of MPA Aleem-ur-Rehman in a torture cell, the ministers said that despite assurance given by the chief minister no action had been taken to arrest those named in the FIR so far.
Dr Ahmad alleged that the government machinery was patronising the criminals who were targeting people on a daily basis. He criticised the government over its indifferent attitude towards the case and said if terrorists were not arrested and torture cells not closed, the legislators would not be able to take part in the assembly.
Mr Soomro informed the house that the Sindh and Karachi police chief had already been instructed by the chief minister for holding fair and impartial inquiry in the case. He added that in the past the police had arrested the killers of MQM-MPA Raza Haider and also Wali Babar and keeping the ground realities in this case too the culprits would be arrested.
Pir Mazhar-ul-Haq said the kidnapping of the MPA was a cause for serious concern and stressed the need to prevent such acts of crime in future. He expressed hope that the matter would be solved if the parties would sit together after the session.
The house, which was called to order by Speaker Nisar Ahmad Khuhro at 10.25am was adjourned after completion of the agenda at 1.55pm to meet on Tuesday at 10am.
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