PESHAWAR: NWFP to lose Rs50m revenue - Tax exemption to five marla houses
By Intikhab Amir
PESHAWAR, Jan 25: A recent amendment to the NWFP Immovable Property Tax Act, 1958, under which houses of up to five marlas have been exempted from property tax, would cause a Rs50 million revenue loss to the provincial government
, official sources said.
The amendment to section 4 of the act was approved by the provincial assembly during its current session. In the light of the amendment, property tax on self-occupied houses measuring up to five marlas in urban areas has been waved, a move described by the sources as an incentive for owners of small houses by the provincial government.
However, the move has deprived the provincial government of a vital source of revenue, the sources said. "The decision to exempt houses from property tax involves financial implications of around Rs50 million," a provincial government official said.
People having only one house measuring up to five marlas in an urban area would not be required to pay property tax in line with the changes made in the act. However, those having property in terms of land or houses - other than the self-occupied house of less than five marlas - would still be required to pay property tax on their property which was in addition to the self-occupied house.
The sources said that thousands of people would benefit from the move. "The decision would not only benefit a large number of people who own houses up to five marlas, it would also be to the advantage of the Excise and Taxation Department whose workload would reduce to a considerable extent," said a senior provincial government officer.
Commenting on the decision's likely impact on Excise Department, an official said: "Recovery of property tax would now be much less cumbersome following the removal of thousands of small taxpayers from the taxpayers' list."
The official said the move would provide a relief to the under-staffed Excise Department and its collectors would now be able to concentrate more on big taxpayers.
"The down side of the decision is that the province will see a reduction in its annual revenue by around Rs50 million but the good thing is that the revenue receipts of the excise department might increase if its collectors concentrate more on big taxpayers after the removal of thousands of small taxpayers," said the official.
The decision, however, would cast a negative impact on province's own receipts, said a finance manager of the province. Moreover, it was likely to come under criticism from foreign donors who wanted the provincial government to broaden its tax base by bringing more people and areas under its tax net, he added.
In 1997, the then government led by chief minister Sardar Mehtab Abbasi had exempted houses up to three marlas from property tax. Under the fresh move, the scope of the waiver has been expanded to houses measuring five marlas. Initially, the sources said, the provincial government wanted to give tax exemption only to those people who own a single house measuring five marlas or less.
However, a draft amendment to that effect when tabled before the provincial assembly was strong opposed by the opposition, forcing the government to exempt all those five marla houses which were being used as personal residences by their owners.
"This excluded a large number of people from the tax net as a result of which the provincial exchequer is likely to experience a revenue loss of around Rs50 million," said an official.
