Guess who’s coming to dinner

After the ruckus created by the opposition on the Reformed General Sales Tax (RGST) issue, the Pakistan People’s Party (PPP) is attempting to bring the Pakistan Muslim League Nawaz (PML-N) to the negotiating table by enticing it with a state banquet invitation. In honour of the Chinese Prime Minister Wen Jiabao’s visit to Pakistan, the President is hosting a state dinner and is being generous enough to invite one of his most scathing critics to come and break bread with him and the visiting premier. This extension of a hand of friendship does not come without strings attached, the most important of these being the fact that the government needs a desperate vote of approval from all stakeholders on the RGST bill. The government has already attained an extension for the passage of this bill through the National Assembly from the IMF and is going to make the most of this time to woo its critics into backing the tax reform.

In resource-starved Pakistan, the RGST may or may not prove a major revenue generator at a time when the country is hard pressed to find some additional funds. The flat rate 15 percent RGST on goods and services eliminates the previous slabs ranging from 17 to 25 percent, producing an estimated shortfall of Rs 1 billion in revenue, unless the tax net is widened through documentation of the economy, a necessary recourse for all businessmen seeking input-output adjustments. PML-N chief Nawaz Sharif is however, like others, playing the populist card on this issue despite the presentation he received the other day from federal finance minister Abdul Hafeez Sheikh and his team. It is no coincidence then that Mr Sharif’s recent interview to a US television channel spoke of nothing but the government’s supposed mismanagement and corruption. Even before that opportunity presented itself, Mr Sharif has of late been ready to attack the PPP-led federal coalition government every chance he gets. In spite of the opposition’s biting and continued criticism, President Zardari has extended a cordial invitation instead of reacting to or being provoked by the ‘lion of the Punjab’.

The government has taken a welcome step towards renegotiating with its fiercest critic. In the face of a souring relationship, it has put its best foot forward by not answering in kind and letting things degenerate into a mudslinging match with the PML-N. However, with the PML-N vowing that, come hail or shine, it will not concede to the RGST, the government is encouraged to keep showing the admirable, and critically necessary patience it has adopted so farAfter the ruckus created by the opposition on the Reformed General Sales Tax (RGST) issue, the Pakistan People’s Party (PPP) is attempting to bring the Pakistan Muslim League Nawaz (PML-N) to the negotiating table by enticing it with a state banquet invitation. In honour of the Chinese Prime Minister Wen Jiabao’s visit to Pakistan, the President is hosting a state dinner and is being generous enough to invite one of his most scathing critics to come and break bread with him and the visiting premier. This extension of a hand of friendship does not come without strings attached, the most important of these being the fact that the government needs a desperate vote of approval from all stakeholders on the RGST bill. The government has already attained an extension for the passage of this bill through the National Assembly from the IMF and is going to make the most of this time to woo its critics into backing the tax reform.

In resource-starved Pakistan, the RGST may or may not prove a major revenue generator at a time when the country is hard pressed to find some additional funds. The flat rate 15 percent RGST on goods and services eliminates the previous slabs ranging from 17 to 25 percent, producing an estimated shortfall of Rs 1 billion in revenue, unless the tax net is widened through documentation of the economy, a necessary recourse for all businessmen seeking input-output adjustments. PML-N chief Nawaz Sharif is however, like others, playing the populist card on this issue despite the presentation he received the other day from federal finance minister Abdul Hafeez Sheikh and his team.

It is no coincidence then that Mr Sharif’s recent interview to a US television channel spoke of nothing but the government’s supposed mismanagement and corruption. Even before that opportunity presented itself, Mr Sharif has of late been ready to attack the PPP-led federal coalition government every chance he gets. In spite of the opposition’s biting and continued criticism, President Zardari has extended a cordial invitation instead of reacting to or being provoked by the ‘lion of the Punjab’.The government has taken a welcome step towards renegotiating with its fiercest critic. In the face of a souring relationship, it has put its best foot forward by not answering in kind and letting things degenerate into a mudslinging match with the PML-N. However, with the PML-N vowing that, come hail or shine, it will not concede to the RGST, the government is encouraged to keep showing the admirable, and critically necessary patience it has adopted so far – Dalytimes