PESHAWAR, Aug 16: Increased receipts on account of general sales tax on services, a provincial levy introduced on July 1, 2000, has provided a much needed fiscal space to the cash strapped NWFP government, according to official sources.

Receipts raised through the GST on services, said a finance manager, had served as a new avenue of income for the NWFP government.

NWFP’s income from the GST on services, according to official record, has grown from Rs243 million collected in the first year of its implementation — 2000-01 financial year — to Rs535 million during the last financial year — 2005-06.

Substantial growth recorded by the GST on services head has given rise to hopes among the provincial government finance managers who are anticipating marked improvement in revenue through this levy in the next four to five years.

In accordance with the provincial government’s medium-term budgetary framework (MTBF), which provides fiscal framework of the province for the next four financial years, proceeds on account of the GST on services are estimated to grow at a consistent annual rate of 13 per cent during a three-year period starting from the 2007-08 financial year. During the 2006-07 financial year receipts are likely to grow at a rate of over 15 per cent as compared to the revenue raised last year.

The province’s finance managers have estimated the GST on services’ receipts to increase from Rs595 million during the 2006-07 financial year to Rs672 million during the 2007-08 financial year, Rs760 million in the 2008-09 financial year and Rs859 million during the 2009-10 fiscal year.

“Earnings from the GST on services have, over the years, proved correct all those who had introduced it in July 2000 with the hope that it will be the tax of the future,” said an official source.

Consistent growth recorded by NWFP government’s proceeds under this head, since 2000-01 financial year, said the official, proved the successful implementation of the decision as the province raised Rs243 million in the 2000-01 financial year, Rs375 million in the 2001-02 financial year, Rs365 million in 2002-03, Rs338 million in 2003-04, Rs392 million in 2004-05 and Rs535 million in the 2005-06 financial year.

Though the levy, according to the provincial government’s record, has recorded growth since its introduction in the 2000-01 financial year, the progress made remained far behind the targeted growth.

Revenue receipts’ projections communicated initially to the province by the federal government for the financial years from 2000-01 to 2004-05 on account of GST on services were much higher than what was finally released to the province in each of the fiscal year of the that period.

The NWFP had been projected to raise Rs928 million from GST on services during the first year of its introduction in 2000-01 financial year.