ISLAMABAD - The government has deferred imposition of sales tax on services on oil tankers till June 30.

“Our negotiations with the federal and provincial governments were successful therefore we are announcing an end to the strike,” said President (South) Oil Tanker Contractors Association (OTCA) Babar Ismail while talking to the media after negotiations with the government. A meeting, which was presided over by the petroleum and natural resources secretary, was attended by representatives of three provinces -- Punjab, Sindh and Khyber Pakhtunkhwa. The Balochistan government had participated in the meeting via phone, Babar Ismail said.

Since imposition of sales tax on services, it was the fifth strike called off by the Oil Tanker Contractors Associations (OTCA). The provincial and federal governments had failed to come up with a solution to the issue since then. “The government has accepted our demands, deferred the imposition of tax till June 30 and constituted a committee to resolve the issue of double taxation,” Babar Ismail said.

It is pertinent to mention here that the provinces have levied sales tax on services of inter-city transportation or carriage of goods by road but they have failed to work out a distribution and collection formula. Punjab is demanding the tax to be recovered on the basis of destination of the transport carriage while Sindh seeks to fix the point of origination as base of tax collection. Every province wants to levy its own percentage of sales tax which will make it too expensive, Baber Ismail said. One province wants to charge 14 percent, other 15 percent and another 16 percent,” he said. “There is a dispute in the mode of collection and distribution formula among the provinces,” he said.

The government has asked the provinces to not create problems in clearing the cartage bills of the oil tanker associations, Baber claimed.

The OTCA president said the ministry provided the platform and played the role of a mediator between the provinces and the oil tankers associations. All the provinces have agreed to form a committee consisting of one representative from each province and four members of the Oil Tanker Associations. The director general (oil) will head the committee, he said.

Now it has been decided that all provincial governments will resolve the issue of double taxation, evolve a common strategy for collection and distribution of sales tax on services and get legislation passed by the respective provincial assemblies, he said.

“A tanker travelling from Sindh to Peshawar will have to pay at least three sales tax on services to the provinces of Sindh, Punjab and KP,” Nauman Ali Butt, secretary general of the Oil Tanker Contractors Association, said. He said that it would make things worse for oil tankers operators.

Some parts of the country faced oil shortage on Tuesday caused by the oil tankers’ strike. However, talking to media persons, Khaqan Abbasi said that there was no shortage of diesel or petrol in the country. “All storages are full, we have around 21-days of storage and even the fuel oil storage is more than the required. There is no apprehension of supply disruption in the backdrop of the oil tankers associations’ strike. If there comes any hurdle, it will be sorted out.”

Shahid Khaqan Abbasi said the federal government had nothing to do with the sales tax and it was between the provinces and the tanker associations to resolve the issue. It’s a tax issue – not a petroleum ministry issue, he said.