LAHORE: The Punjab government is likely to face revenue shortfall in the registration and token tax receipts of imported motor vehicles exceeding 1,300cc after it has imposed one-time tax on such vehicles for this fiscal year.

One such tax on imported luxury vehicles in 1990s caused embarrassment as Shahbaz-led government had to withdraw it on court orders.

Informed sources in the Punjab Excise and Taxation (E&T) department told Dawn on Wednesday that the amendment to the Punjab Finance Act 2016 had been incorporated by the government despite objection by the department that any such tax would ultimately reduce the volume of registrations and token tax revenue in the province.

They said owners of such vehicles are likely to buy luxury vehicles in Punjab and get them registered in other provinces or Islamabad.

Sources further said two experiences of imposing luxury tax on imported vehicles in 1990s and income tax on commercial vehicles in 2000s failed and had to be withdrawn earlier.

Official statistics available with Dawn show the E&T department had collected 30pc more revenue in registration of vehicles above 1300cc in 2015-16 compared to fiscal year 2014-15. An increase of 77pc has been witnessed in the registration of imported vehicles above 1,000cc to 1,299cc in the corresponding period.

According to the departmental estimates, around 70pc of the total imported vehicles countrywide are used in Punjab.

Under the Punjab Finance Act 2016, Section 10 titled Tax on Imported Motor Cars states: Subject to this section, a one-time tax on the imported motor cars registered after June 30, 2016 as mentioned in column 2 of the table shall be levied at the rate mentioned in column 3 thereof: Rs70,000 rate of tax for motor car with engine capacity exceeding 1,300cc but not exceeding 1,500cc; Rs150,000 for motor car with engine capacity exceeding 1,500cc but not exceeding 2,000cc; Rs200,000 for motor car with engine capacity exceeding 2000cc but not exceeding 2,500cc; and Rs300,000 for motor car with engine capacity exceeding 2,500cc.

Explanation: (1) In this section the term ‘motor car’ means a motor car defined as in the Provincial Motor Vehicles Ordinance 1965; (2) The government may, by notification, exempt any class of vehicles from the levy of the tax under this section; (3) The tax under this section shall not be levied on a motor car owned by the federal government, the government or any other provincial government; and (4) The government, may by notification in official Gazette, make rules to carry out purposes of this section.

Published in Dawn, July 22nd, 2016