The federal government has asked the Sindh, Punjab and Khyber Pakhtunkhwa governments to defer taxing transportation services during this fiscal year. The move came after All Pakistan Oil Tankers Association (APOTA) went on strike on Tuesday, initially on provincial level, to protest what the haulers claimed unjustified taxation by the federal and provincial governments.
The resistance came against a perceived six percent increase in income tax from two to eight percent by the Federal Board of Revenue (FBR) and the imposition of sales tax on transportation services by the provincial governments of Sindh, Punjab and Khyber Pakhtunkhwa.
Things, however, appeared quite dubious on Thursday when APOTA chairman Yousaf Shahwani refused to have a direct link with the strike. "We have nothing to do with the strike which was called for by the contractors in collaboration with Pakistan State Oil (PSO) to exert pressure on the ministry," he claimed while talking to Business Recorder.
The APOTA chief said that the contractors and not the transporters were to pay increased taxes to the federal and provincial governments.
His son, the Association's senior vice-chairman Shams Shahwani, however, had on Tuesday owned the wheel-jam strike which, he said, was to resist the governments' highhandedness in the face of higher taxes on haulers.
Meanwhile, a PSO spokesman denied outrightly any stake in the dispute given the fact that the state-run oil importer was not liable to pay any taxes.
As Federal Minister for Petroleum and Natural Resources (P&NR) Shahid Khaqan Abbasi put it, the issue now stands "resolved" after Secretary Petroleum Arshad Mirza met the representatives of Oil Tanker Contractors Association (OTCA) in Islamabad on Tuesday. Also present in the meeting were Director General Oil Taj Muhammad Afridi and MD PSO Irfan K Qureshi. In the meeting, according to sources, the contractors complained of heavy federal taxes that, they said, had already burdened the oil transportation. "Additional taxation by provincial governments will increase the difficulties," they said.
In response, the federal secretary informed the oil contractors that the FBR through a letter had clarified not to have raised the income tax rate from two to eight percent.
As for the imposition of sales tax on transportation services by the provinces, the secretary petroleum said to have sent letters to the provincial chief secretaries for deferment of the levy.
The ministry of petroleum and natural resources, the sources said, claimed to have taken up the issue at highest level to convince the three federating units to revisit the tax. This made the OTCA members call the strike off immediately.
"The federal government is alive (to the situation)," Federal Minister Abbasi told Business Recorder when asked if his side was aware of the controversy.
Referring to provincial sales tax, the petroleum minister said though the levy was "not our domain" but "it is resolved" by the secretary petroleum.