01 March 2004	Monday	09 Muharram 1425

PESHAWAR, Feb 29: The gap between the annual target and revenue raised under the head of land tax and agriculture income tax widened further by the end of the first seven months of the current financial year, according to official sources.

The province has set a Rs65 million target for the current financial year to raise through both the components of the land tax and agriculture income tax. However, by the end of the first seven months of the ongoing fiscal year the provincial government had raised around Rs30 million, missing the proportionate basis target for the same period by Rs8 million.

On a proportionate basis, the province was supposed to raise Rs38 million during the July-January period of the current fiscal year. The gap calculated on the basis of proportionate basis target and actual receipts climbed to a new high by the close of the seventh month.

According to provincial government's revenue officers, the gap stood at around Rs5 million by the end of the first three months of the fiscal year which has now risen to Rs8 million.

"The widening gap leaves little hope that the province would be able to achieve the annual recoveries target," said the officer. This would not be the first time that the province would miss the annual target under the head of land tax and agriculture income tax.

"The province has never been able to meet the target since it was introduced on acreage basis back in the mid 1990s," said the officer. Despite the fact that the province did not meet the last financial year's recoveries target, even then the provincial government raised the size of the annual target by Rs5 million for the 2003-04 financial year.

In line with its loan agreement with the World Bank, the provincial government set the Rs65 million target under this vital head of provincial own receipts raising it from the 2002-03 financial year's level of Rs60 million.

Another official of the provincial government said that the province might end up with total annual recoveries of around Rs50 million. The government might experience a more difficult situation if it had to declare any particular part of the province as calamity-hit area, the officer said. In such an eventuality, recovery of taxes would also have to be given up.

"Last year, too, several parts of the province experienced natural disasters as a result of which they were declared calamity-hit areas, stalling recovery of taxes and provincial receipts in consequence," said the source.

The province, said the sources, was in the process of preparing a new piece of law to improve its revenue base and monthly collections from the farm sector. "Under its agreement with the World Bank, the provincial government is required to introduce the new law from the start of the next financial year," said the official.

In this respect, several rounds of talks have already been held between the representatives of the lending agency and the provincial government during the last few months.

The need to replace the existing piece of law - introduced by the last provincial government through a proclamation by the provincial governor - was felt after the province experienced decline in its revenue receipts since it got application some three years back.

Though the agriculture income tax introduced by the provincial government, said the source, led by chief minister Sardar Mehtab Ahmed Khan was not small farmers friendly, the province raised over Rs70 million recoveries during the 1997-98 financial year.

The existing law, said the source, introduced by the last military backed civilian government in the province had failed to yield impressive results and appeared to be beneficial to big land lords.

Owners of small land holding, added the officer, continued to be pressed hard by the existing law as was the case with the previous law introduced by Sardar Mehtab's government. "But, it is more friendly towards big land lords who have been provided ample opportunities, under the existing laws, to exploit to their benefit and evade income tax," said a senior government functionary.