Finance Minister Dr Abdul Hafeez Shiekh has expressed concern over provinces' failure to take effective measures to tax the agriculture sector with the objective to gradually increase tax-to-GDP ratio, it is learnt.

Sources said that the issue was discussed here on Friday during the National Finance Commission (NFC) meeting, presided over by the Finance Minister and attended by provincial finance ministers, members of NFC and federal and provincial finance secretaries.

Sindh Finance Minister Murad Ali Shah informed the meeting that the revised law on agriculture income tax, prepared by the provincial government, has been circulated among the stakeholders for comments and would be introduced in the provincial assembly for legislation.He said that collection of agriculture tax was less in the province because of flood.

An official quoted Punjab Finance Minister Kamran Michael as saying that collection of agriculture tax in Punjab was Rs 800 million.
Another official of Punjab province cited political pressure as major factor in the way of taxing agriculture income.
About GST on services, sources said, collection mechanism of GST on services was opposed by the rest of three provinces arguing that GST collection by Sindh would affect the divisible pool.
The meeting constituted a ministerial committee with all Finance Ministers to look into the matter in the light of sales tax figures provided by the Federal Board of Revenue (FBR).
The FBR would provide statistics of GST collection on services by Sindh province as well by the federal government on behalf of other three provinces to the committee.
Sources said that contention of Sindh government was that as per Constitution collection of GST on services was the provincial subject that was also acknowledged in the 7th NFC award.
The meeting was informed that the federal government had transferred Rs 807.08 billion to the provinces last year from the divisible pool.
Of this, Rs 417.58 billion were transferred to Punjab, Rs 198.14 billion to Sindh, Rs 118 billion to Khyber Pukhtunkhwa and Rs 73.36 billion to Balochistan.

Talking to media after the meeting, Hafeez said that the meeting discussed the performance of NFC Award. He said that Rs 1455 billion were collected in the divisible pool last year and Rs 831 billion had been transferred to the provinces, while federal share was Rs 634 billion.
He said that NFC meeting also discussed performance of NFC award of the first quarter of the current fiscal year and other procedural issues. He said that share of provinces in the divisible has been increased to 57.5 percent and with the increase in share provinces would now be able to cater to the basic needs of the people in a better way.
He said that to reduce the poverty a good policy, which should continue for many years as well as various other steps are required and 7th NFC award is a good step in this direction.
The Minister said that Rs 33 billion was distributed last year and Rs 65 billion has been allocated in the budget for the current fiscal year for Benazir Income Support Program (BISP) to provide relief to the poor.
Additionally, he said, Rs 100 billion have been transferred to the rural economy through agriculture policy and provided Rs 500 billion to the Higher Education Commission (HEC) despite the fact that education is a provincial subject. All these measures, he said, had been taken to provide relief to the weak segment of the society during transition period.
On the question about GST on services, he said that the agenda item related to GST had been deferred. Khyber Pakhtoonkhwa Finance Minister Hymayun Khan said that his province has been receiving amount for war on terror and net hydel profit. He said that KP received Rs 10 billion arrears of net hydel profit last year and Rs 12.5 billion has been released so far in the current fiscal year of the total Rs 25 billion.
He said his province received Rs 15 billion on account of war of terrorism. Punjab Finance Minister said that Punjab government has serious reservations about the GST on services which were raised in the NFC meeting and a committee was constituted to resolve them.