LAHORE, June 10: The Punjab cabinet decided on Tuesday to introduce flat rate and land-based water cess collection system in the province after finding the existing crop-based mechanism helpful for tax evasion.

The cabinet which met under Chief Minister Pervaiz Elahi decided that the new water rate would be Rs50 per acre for rabi and Rs85 per acre for kharif crops. It also reduced annual abiana on sugarcane and orchards from the existing Rs177 per acre to Rs135 per acre and Rs280 to Rs250 per acre, respectively.

The cabinet declared that the new system would benefit small farmers.

Nevertheless, official sources said the new system would greatly help the government in enhancing its revenue collection under the head of abiana.

They said the decision was based on the realization that big farmers were evading the tax in connivance with patwaris by declaring that they had grown low-taxed crops instead of the actual ones carrying a high water rate. They were also evading tax by pretending, again with the connivance of patwaris, that they had not grown any crop.

They said the cabinet felt that the flat rate abiana, to be collected on the basis of land, would plug all such loopholes and help the government meet its annual abiana targets.

The chief minister said introduction of new abiana collection system was the second historic decision by his government after the recent agriculture income tax exemption given up to 12.5 acres of land. The government would fulfil all its commitments with the people, he said.

Mr Elahi said the decision would benefit farmers in the province. It would also help the government make better planning on the basis of accurate data about crops and area under cultivation.

According to the figures presented to the cabinet, the decision would benefit farmers owning 95 per cent land under cultivation in the province. According to them, wheat was grown on 40 per cent of the land in the province for which the water rate had been reduced from the existing Rs60 to Rs50 per acre.

Official sources said the cabinet also decided to introduce a new system to check whether a development project was giving its desired results for the benefit of the people.

Under the new system to be called PC-4 report, the government would check the efficacy of the project for three years.

At present all the government projects revolved around three functions; creation of a scheme, sanction of budget for it and its implementation through a fiscal monitoring, they said.