KARACHI, May 6: The Pakistan People’s Party on Friday expressed concern over government’s reported move to abolish excise duty in next year’s budget with a view to “effectively enforcing the sales tax regime” and in order to “avoid double taxation”.

In a statement, the PPP maintained that Article 161 (1) of the Constitution explicitly provided that “the net proceeds of the federal duty of excise on natural gas levied at well-head and collected by the federal government, and of the royalty collected by the federal government, shall not form part of the federal consolidated fund and shall be paid to the province in which the well-head of natural gas is situated.”

“The spirit of Article 161, which also provided for direct transfers of profits on hydro-electric generation to the province in which these were located, is that the revenues and incomes collected as a result of mobilization of natural resources should go to the province where the resource was situated and not to the federal government,” claimed PPP’s central information secretary Taj Haider.

He said that it was a pity that besides denying the NWFP of its rightful profits on hydro-electric generation according to profit calculation formula evolved by the federal government itself, a new tax by the name of gas development surcharge was introduced to deny Balochistan and Sindh of directly receiving the net proceeds of taxes collected at natural gas well-heads. This new tax was levied in order to circumvent the constitutional provision by giving the tax a name other than excise duty.

The right course of action should have been abolishing the gas development surcharge and merging its collections with the excise duty to be paid directly to the provinces, he said.