PESHAWAR, Nov 30: The NWFP government is considering bringing areas previously forming the now-abandoned Malakand division under the tax net in an effort to broaden its tax base, official sources said.

“An understanding in this respect has already been reached among the finance managers of the province and now it is up to the ruling alliance to take a final decision,” said a senior government functionary.

According to the sources, the province is required to broaden its tax net to the areas previously falling under the Malakand division from the start of the next financial year in line with its commitment with the World Bank.

Extension of the tax net to these areas is part of the conditions the provincial government has to fulfil to qualify for the third tranche of the World Bank loan for the Provincial Reforms Programme (PRP).

“The province is required to start the process at the start of the next financial year,” the officer said, adding that “the provincial government is facing a daunting task as similar moves made by the previous governments proved futile.”

The move to extend agriculture income tax — a provincial levy — to the Malakand division (now abandoned) during the last PML-N government could not succeed after the then chief minister Sardar Mehtab Ahmed Khan succumbed to the pressure of lawmakers from his own party.

The sources said broadening of the provincial tax base and improvement in the revenue generated through provincial own receipts was not possible without bringing these areas under the tax net.

“How can you expect improvement when six out of 23 districts are out of the ambit of the provincial taxes,” said a senior official.

However, the sources apprehended that the government would not be able to meet the target of extending the tax net by the start of the next financial year as it would require a herculean task in respect of fulfilling procedural requirements by bringing about amendments to laws and to persuade the people of Malakand region to agree to paying provincial receipts.

Bringing the Malakand regions under the tax net would mean an end to the special status being enjoyed by these areas at present, said the official.