KARACHI: Sindh Chief Minister Syed Murad Ali Shah has said that he has been requesting the federal government to hand over collection of sales tax to provinces because the consumers are closer to them.

He said this while talking to Country Representative of International Monetary Fund (IMF) Tokhir Mirzoev, who called on him here at CM House on Wednesday.

During the meeting, which was also attended by principal secretary to CM Sohail Rajput, finance secretary Hassan Naqvi and two officers of the IMF, they discussed economy of Sindh, development activities and fiscal relations between the provincial government and the Centre.

The chief minister said that the Sindh government had achieved almost all its tax collection targets by the Sindh Revenue Board (SRB), excise and taxation, but only the Board of Revenue lagged behind in achieving its target. “The SRB achieved the target of Rs78 billion while the excise department collected over Rs52bn,” he said.

He added that the agriculture income tax target had been increased from Rs650 million to Rs1bn. “We are introducing reforms in agriculture income tax and hope we would be able to achieve the target of Rs1bn,” he said.

The chief minister said that the total provincial receipts were Rs199.626bn while the major chunk of Rs627.3bn came from the federal government. “We are trying to increase our own resources,” he said.

He added that mostly the federal government failed to achieve its recovery targets, and therefore major shortfalls occurred in the federal transfers to the provinces, which affected the cash flow of the provincial government badly.

The chief minister said that he had repeatedly requested the federal government to allow provincial governments to collect sales tax on behalf of the Centre for onward distribution among provinces as per their agreed share.

“I am sure the provincial governments will be able to collect more than the targets given to them by the federal government because they are too close to consumers,” he said and added that the federal government was reluctant to do so.

He said under the new policy the provincial government had devolved property tax to local councils and it had great scope and potential to enhance the recoveries. “This would definitely strengthen financial position of local councils,” he said.

He said that he had tried to develop better fiscal policy under which budget was released in time and special attention had been given to social sectors such as education for which Rs202bn had been earmarked, which was 24 per cent higher than the last financial year.

Similarly, health sector was given Rs100.32bn which was 25.5pc higher than last year.

Mr Shah said that for the first time Rs14bn had been allocated for maintenance and repair of the existing infrastructure.

“This means not only the government is [constructing] new infrastructure, but giving special attention to maintain the existing building and road network,” he said.

The IMF country representative said that fiscal management was most important for a provincial government. “The provincial government is doing better, but study of the entire financial system is necessary for future planning and management,” he said.

On this the chief minister urged him to support the provincial government for the purpose.

The chief minister directed the finance secretary to hold a meeting with IMF country representative in Islamabad and assign the study as suggested by the IMF.

Published in Dawn, July 20th, 2017