PESHAWAR, March 23: Incentives to the manufacturing sector under the industrial policy announced by the NWFP government recently would cost over Rs 30 million to the provincial government annually, according to official sources. The government exempted industrial units (new and existing) from payment of property tax for five years. Similarly, the sector was also exempted from payment of education cess.
“In all, the incentives would make the government to suffer an annual loss of over Rs 30 million,” said an official of a tax collecting agency of the province. The excise and taxation department, NWFP, which is responsible of collecting property tax from the industrial units would suffer an annual loss of between Rs25 million and Rs30 million.
The Workers’ Children Education Board will lose Rs3 to Rs4 million annually because of abolition of education cess.
The net annual revenue loss because of the industrial package, said the sources, would stand slightly over Rs30 million.
According to official sources, the provincial government has suffered a revenue loss of over Rs80 million, during the current financial year, because of the provincial government’s decisions.
Earlier, the government had announced to exempt owners of self-occupied houses, covering an area up to five marlas, from payment of property tax.
The decision entailed revenue loss of about Rs50 million for the provincial government, eliciting a prompt reaction from one of its major foreign donors who, according to official sources, expressed its dismay in this regard during a recently held meeting with the provincial finance managers.
“Details of the fresh measures have not yet been communicated to the excise and taxation department, hence, it would be too early to say anything about the donor agency’s reaction to the shrinking revenue base the province would face because of giving five year exemption to the manufacturing sector,” said a senior officer of the provincial government.
While the officials of the provincial industries department hailed the decision of giving waver to the industrial sector under the two heads, the government’s tax collectors said that the move would serve as a big help to promote industrialization in the province.
“It (exemption from property tax and education cess) would save the industrialists from the highhandedness and exploitation of the tax collectors of the excise and taxation department who used to harass them in the name of collecting receipts under the two heads,” said a well placed official of an agency of the federal government, assigned to promote business activities and self employment.
However, the excise department’s officials said that majority of the industrialists were used to pay Rs10,000 to Rs20,000 as property tax every year.
They said that the province had negligible number of industrialists paying property tax between Rs100,000 and Rs200,000, hence, the decision of exemption would not make much difference.
“Exemption from payment of education cess would certainly deprive the Workers’ Children Education Board from an important source of income which it used to spend on its educational institutions, but the move does not entail a big monetary incentive for the industrialists,” said a tax collector.
Interestingly, the Chief Minister Akram Khan Durrani announced the exemptions during his inaugural speech at an international investment conference here on March 14, but the industries department, NWFP, has yet to take practical steps to implement the decision.
“The decision of the provincial cabinet has not been communicated to the department,” said a well placed official. The chief minister had announced that the decision would be given legal cover to ensure consistency in the policy.
