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PESHAWAR, Feb 1: The World Bank is likely to extend a $200 million soft loan this fiscal to NWFP. The loan is aimed at bridging the provincial fiscal gap.
A high-level World Bank mission led by its operation advisor, Abid Hassan held talks with the provincial finance minister farid rehman and minister for education Imtiaz Hussain Gillani. The discussion was focused on progress and strategies of the NWFP government’s overall medium-term provincial reforms programme aimed at improving governance and poverty reduction.
The World Bank mission expressed its keen interest in the initiatives taken by the government so far and its objectives and commitments towards social sectors and human development in the province.
The World Bank also expressed its willingness to finance the provincial government’s fiscal gap required to meet the objectives of boosting the provincial economy.
It was agreed that the bank would facilitate the provincial government in preparing and documenting a well-thought-out strategy with goals fixed for the medium term.
Farid Rehman informed the mission of the government’s effort to establish a baseline info-data through UNICEF assisted multi- indicators cluster survey (MICS), which would help in laying down provincial economy and a positive impact on the social development. He said that the provincial reforms also focussed on private sector development to create a fiscal space for the province.
FARM TAX: Anticipating massive shortfall in recoveries of land tax and agriculture income tax, the NWFP government has reduced its revenue target under the same head by over Rs110 million for the fiscal year 2001-02, according to official sources.
The NWFP government had fixed the agriculture income tax target for the financial year 2001-02 at Rs180 million. According to official documents available with Dawn, the target has now been fixed at a benchmark less than Rs70 million.
At the close of first six months of the current fiscal year the provincial government raised just over Rs14.3m, including Rs13.8m under the land tax component and remaining Rs500,000 as agriculture income tax.
“Shortfall under both the components of the provincial tax has left little doubts about chances to meet Rs180 million target,” said official sources.
This is for the second financial year the NWFP finance managers set the agriculture income tax target at Rs180 million. In line with the previous financial year, the province, sources said, was not likely to meet or record recoveries any thing near to the annual target set with the federal government’s instructions.
Against Rs180 million annual target, set by the NWFP finance department, the provincial Board of Revenue (BoR) had revised downward the recoveries target for the current financial year, fixing it at over Rs67 million, a cut by Rs110 million.
During the last financial year, the province could not recover any thing against the Rs180 million target due mainly to the failure of the agencies concerned to frame and notify rules required to make the land tax and agriculture income tax ordinance 2001, applicable.
Senior government functionaries told Dawn that target for the financial year 2001-02 had been fixed unrealistically and unreasonably high without keeping in mind that the province had a very small number of land holdings, involving 100 acres or above each.
The Rs180 million target, said the official sources, was by no means achievable in view of the large number of small landholdings the province had.
There would be very few — may be in hundreds — who would be liable to pay agriculture income tax. Otherwise, large majority of the land holdings would fall under the land tax net that would hardly fetch Rs50 million if the district-based revenue collectors came up with extra-ordinary revenue collection performance.
Besides, the newly-introduced land tax and agriculture income tax ordinance 2001, said the experts, carried in built incentives for the big land lords.
Though the NWFP finance department had laid claim to Rs20 million collection under the agriculture income tax head during the financial year 2000-01 — a claim factually incorrect in accordance with a set of official documents, thereby the province raised funds much less than that amount.
