ISLAMABAD, June 19: The Capital Development Authority (CDA) has proposed to levy residence tax and increase the water charges and toll tax to meet an expected deficit of Rs200 million in the fiscal year 2003-2004, a senior official of the authority’s finance wing told Dawn on Thursday.

He said the CDA had prepared a proposed budget of Rs4.6 billion for the next fiscal year, adding that it estimated that the expenditures would be Rs200 million higher than the expected income.

The proposed budget would be discussed in a meeting within a week, he added.

He said the reduction in monthly profit on the CDA’s assets deposited in the banks had also adversely affected the annual budget of the authority. According to a new policy of banks, the monthly profit rate has been reduced to 2 per cent from 12 per cent.

About increase in the toll tax, the official said that the authority could not increase the tax by more than 50 per cent and if this increase was approved, the CDA would generate Rs50 million more revenue.

The authority, he added, was also considering increasing water charges to meet the annual deficit.

The official said there was another proposal under which residence tax would be introduced in the capital for the first time. He said this tax had never been imposed anywhere in Pakistan, but was levied in many countries.

According to the proposal, the residence tax would be imposed only on very high income groups and the common man would be exempted from it.

In reply to a question on ineffectiveness of residence tax, the CDA official agreed that it would be quite difficult for the authority to impose the tax on influential class of society as they would definitely reject it.

The imposition of residence tax had also bee proposed in the budget 2002-2003 but it was rejected by the CDA board in a pre- budget meeting.

The official said the annual deficit could be met by cutting down the self-finance schemes under which uplift and repair work in sectoral areas was done by the CDA through its own resources. “If the self-finance schemes are slashed, it would directly affect the citizens,” he feared.

During the fiscal year 2002-2003, the CDA faced a similar situation and searched ways to meet the annual deficit, a source in the CDA said. “However, finally it was decided that the CDA will increase the rate of different fees to generate additional amount of Rs177 million,” he added.