KARACHI - Sindh Chief Minister Syed Murad Ali Shah has said that he has been requesting the federal government to hand over collection of sales tax to the provinces because the consumers are closer to them.

This he said while talking to Country Representative of International Monetary Fund (IMF) Mr Tokhir Mirzoev who called on him here at the CM House on Wednesday. Those who attended the meeting include Principal Secretary to CM Sohail Rajput, Secretary Finance Hassan Naqvi and two officers of IMF.

The IMF Country Representative discussed economy of Sindh, development activities and fiscal relations between the provincial government and the center. He also discussed the IMF report released recently in which emphasis has been given on the usage of federal funds more sagaciously particularly for social sector and simultaneously provincial government should enhance its own resources.

The chef minister said that the Sindh government has achieved almost all its tax collection targets by Sindh Revenue Board (SRB) Excise & Taxation but only Board of Revenue remained little lagged behind in achieving its target. “The SRB achieved the target of Rs78 billion while the Excise department collected over Rs52 billion,” he said.

He added that agriculture Income Tax target has been increased from Rs650 million to Rs1 billion. “We are introducing reforms in agriculture income tax and hope we would be able to achieve the target of Rs1 billion,” he said.

The chief minister said that the total provincial receipts are Rs199.626 billion while the major chunk of Rs627.3 billion comes from the federal government. “We are trying to increase our own resources,” he said. He added that mostly the federal government fails to achieve its recovery targets, therefore major shortfalls occur in the federal transfers to the province which affect the cash flow of the provincial government badly.

Syed Murad Ali Shah said that he has repeatedly requested the federal government to allow provincial governments to collect sales on behalf of the Center for onward distribution among the provinces as per their agreed share. “I am sure the provincial governments would be able to collect more than the targets given to them by the federal government because they are too close to the consumers,” he said and added that the federal government was reluctant to do so.

He said under the new policy the provincial government has devolved Property Tax to local councils and it has great scope and potential to enhance the recoveries. “This would definitely strengthen finacila position of the local councils,” he hoped.

He said that he has tried to develop better fiscal policy under which budget is released in time and special attention has been given to social sectors such as education Rs202 billion which is 24 percent higher than the last financial year. Similarly, health sector has been given Rs100.32 billion which is higher by 25.5 percent than last year.

Murad Shah said that for the first time Rs14 billion have been allocated for Maintenance & Repair (M&R) for the maintenance of the existing infrastructure. “This means not only the government is reconstructing the new infrastructure but giving special attention to maintain the exiting building and road network,” he said.

The IMF Country Representative said that fiscal management is most important for a provincial government. “The provincial government is doing better but even then study of the entire financial system is necessary for future planning and management,” he said. On this the chief minister urged him to support the provincial government for the purpose.

The chief minister directed Secretary Finance to hold a meeting with IMF country Representative in Islamabad and assign the study as suggested by IMF.