Lawmakers ask IMF to ease pace of adjustments; oppose centralisation of tax on services.

Byline: Khaleeq Kiani

ISLAMABAD -- The parliamentarians on Wednesday opposed government's proposed move to centralise sales tax on services on the grounds of it being against the constitution and asked the International Monetary Fund (IMF) to relax economic targets set under the $6 billion extended fund facility that was adversely affecting the country's businesses and the people.

The IMF mission, however, showed its satisfaction over government's macroeconomic policies including taxation, exchange and interest rates to steer the country out of challenges.

This was the crux of a joint meeting of Standing Committees of the Senate and the National Assembly on Finance and Revenue with a visiting staff mission of the IMF led by Ernesto Ramirez-Rigo.

Secretary Finance Naveed Kamran Baloch led the government side in the absence of PM's Adviser on Finance Dr Abdul Hafeez Shaikh.

The members of both houses called for rationalising the pace of stabilisation and adjustment to minimise shocks to the people, businesses, industry and the economy and reduce interest rates to help job creation and revenue generation.

They also called for relaxing the revenue collection target for the year while suggesting the interest rates and reform process should be gradual.

PML-N MNA Aysha Ghaus Pasha said the delegation listened to their demands but committed nothing.

Soon after the meeting, Senate Standing Committee on Finance Chairman Farooq H. Naik said the IMF delegation repeatedly clarified that it was not IMF's programme but government's own programme which was currently being implemented.

'Therefore, we should not blame the IMF much; we have to deal with the government'.

He said the most important thing now being introduced was the centralisation of sales tax on services.

He said the collection of sales tax on services is a provincial domain under the constitution after the 18th amendment but as part of the proposed Pakistan Revenue Authority (PRA), they are trying to centralise it so that provinces will have to be dependent on the federation.

'If this is done, or the IMF gives it a priority and presses for it or the government accepts, it will be a violation of the constitution and it will undermine the rights of the provinces', he told the meeting.

The sales tax on services was a provincial or state subject in other countries and likewise the provinces in Pakistan had also introduced tax laws, he added. 'You cannot abolish these laws and if you try to do...