PESHAWAR, Nov 25: The NWFP government will introduce new taxation measures to improve revenue generation from the agriculture sector making major changes under the current system, officials told Dawn.

“We are in the process of introducing new taxation system under which the tax base will be expanded, revenue generation will be improved and lacunas existed under the existing system will be removed to improve revenue generation,” said a  senior government functionary.

The need to replace the present system was felt after the provincial government’s revenue receipts under the head of agriculture income tax remained marginal.

The system was introduced from July 1, 2001 involving two components of taxes, which included land tax and agriculture income tax. The system could not yield desired results and the province has not been able to meet the annual revenue generation target set for the last three financial years wherein the new system remained under application.

“Preliminary work on the new system has already been done by a private consultant who conducted a comprehensive study on the subject and put forth his recommendations for improving revenue receipts under this vital head of provincial own receipts (PORs),” said another official.

The introduction of an effective taxation system for the farm sector also formed part of the commitments the province was required to fulfil under its loan agreement with the World Bank which is providing financial assistance to help provincial government implement its three-year reforms programme, the official added.

Final draft of the agriculture sector study had already been shared with the lending agency which wanted the provincial government to introduce the new system from the beginning of the new financial year on July 1, 2004.

“By all means, the government has to introduce the new system from the next financial year to fulfil a condition of the World

According to official figures, this year too the tax collection seems to go below target. An amount of Rs 16.25 million was supposed to be collected from the two heads of land revenue and agriculture tax during the first quarter of the financial year. However, the collection fell Rs 5.5 million short as receipts stood at Rs 10.75 million.

“In view of the recoveries made during the first quarter, it is unlikely that the province would be able to record recoveries even close to the annual revenue target of Rs 65 million set for the 2003-04 financial year,” said an official.