PESHAWAR: The Consortium for Development Policy Research in collaboration with provincial government and other organisations launched a policy note on ‘reforming property tax in Khyber Pakhtunkhwa’ to improve this sources of local revenue and strengthen its link with urban service delivery.

The policy note was launched through a webinar by CDPR in collaboration with International Growth Centre (IGC), Sustainable Energy and Economic Development (SEED) and provincial government.

It presents a framework for reforming property tax in the province to guide future reforms geared towards improving the performance of this important source of local revenue and at the same time strengthening its link with urban service delivery.

The policy note was driven by SEED’s strategic priority to provide technical assistance to the government, funded by Foreign, Commonwealth and Development Office (FCDO).

First-ever policy note for KP launched through webinar

One of the main agendas of SEED, a multi-sectoral seven-year programme, is to support the government in achieving economic development and undertake sustainable energy reforms in the province.

As a first ever note of its kind produced for excise and taxation department, led by Ghazan Jamal as special assistant, it provides a structure of key reforms for property tax.

The note has been authored by Dr Ali Cheema, the director of Mahbubul Haq Center at Lums and lead academic at IGC, and Ali Abbas, a PhD student at Cornell University.

Based on the recommendations of the note, the government plans to reform and strengthen the province’s urban immovable property tax (UIPT) system and lay the foundations for sustainably financed public investment that can realise the potential of urban areas as engines of growth and development.

The keynote speaker at the webinar was Ghazan Jamal. Other panelists included Hassan Khawar and Dr Ali Cheema. The session was moderated by Dr Ijaz Nabi.

Many senior academicians, policymakers, businessmen and representatives of provincial government, KP Revenue Authority, Khyber Pakhtunkhwa Revenue Mobilisation and Public Resource Management, Sarhad Chamber of Commerce and Industry and national and international think tanks attended the session.

With the demand of public goods rising leading to worsening urban delivery deficits, a conceptual reform framework was discussed for the province drawing upon the evidence of property tax reforms in Punjab and other developing countries with similar conditions.

The proposed reform framework is pillared on three main ideas including policy reform in the areas of property tax valuation and exemptions; strengthening enforcement capacity via digitisation of property records, tax payer facilitation and tax collector incentives; and improving citizens tax morale by increasing perceptions of fairness and equity of the tax system and government accountability.

The provincial government has also expressed strong demand to reform the UIPT to transform it to an important lever to influence urban policy.

Dr Ali Cheema highlighted the key reform areas considering increasing urban demands in the province and limited financing options. The key takeaways included enhancing taxpayer compliance, clarifying the linkages between taxes and benefits, digitising records and introducing human resource reforms for tax collectors.

Ghazan Jamal endorsed the suggestions and outlined the next policy steps to be taken by the provincial government including GIS mapping of property data, identifying potential partners for digitisation and reducing different types of property taxes.

Published in Dawn, October 29th, 2020