Senate initiates debate on RGST: resolution by provinces prerequisite for taking it up in parliament, says Rabbani

The Senate on Tuesday initiated debate on General Sales Tax, 2010 amid disapproval of the opposition and warning from Awami National Party (ANP) of withdrawing its support in case its recommendations were rejected not taking into account Senator Mian Raza Rabbani's observation that resolutions from provinces on the subject is a constitutional prerequisite.
Raza Rabbani pointed out to Finance Minister Dr Hafeez Sheikh as he was to open the debate on GST 2010 that GST comes under the domain of provinces after the 18th Constitutional Amendment and a resolution from provinces is required under Article 144 of the Constitution.
"Until and unless that is done, it is not possible for us to take up the matter," said Raza Rabbani adding, it is prerequisite prior to voting on the bill in the National Assembly. However, the upper house initiated a debate on General Sales Tax Bill 2010 and Finance Amendment Bill 2010 under Article 73 of the Constitution as Finance Minister took the opportunity of addressing the senate with an aim to dispel misconceptions about the bill and to take the house into confidence.
Dr Hafeez Sheikh opened the debate on General Sales Tax Bill, 2010 with candid acceptance of the fact that the government was on International Monetary Fund's (IMF) programme and is under commitment with the lending body from which $7 billion had been received under Stand-By-Arrangement (SBA) for stabilisation of the economy after economic crisis in 2007.
"We are not taking dictations from the IMF, however, its board of governors makes sure the recovery and it looks after how can we generate our resources to repay the $11 billion," he added. He clarified that the step is just aimed at reforming the existing taxation system which is in practice since 1990 and the government was not going to impose any new tax on the people. This is the step towards structural reforms that remained missing in the past due to which our economic growth did not lasted for long, he added.
The decision in this respect was taken by the cabinet prior to budget and we took five months to bring it in the House merely to evolve consensus among the provinces and take them on board, he added. Dr Hafeez Sheikh said that Reformed General Sales Tax (RGST) was aimed at improving the existing system, a long overdue effort to reform the system encroached upon by the vested interests.
He said that the government is going to reduce sales tax from existing 17-25 percent to 15 percent for brining a stability so that no one could inflate the rates at his own sweet will. In addition, he said, we want to go for automation to overcome the menace of corruption.
"Those who are opposing RGST are actually afraid of automation of tax collection mechanism as they know, if their income is automated, they would no longer be able to evade tax," he added. He dispelled the impression that that the move is to tax the poor. In order to substantiate his point he said that fruits, pulses, vegetables, meat, poultry, life saving drugs and educational institutes would be exempted from RGST.
Meanwhile, Haji Adeel of ANP made a categorical statement that his party would not vote for the RGST if its recommendations were not accepted by the government. While unveiling his party's suggestions he said, there should not be any tax on any edible being produced in the country along with medicines and education.