KARACHI, May 27: The tax on income from agriculture cannot be assessed and collected judiciously unless the entire land record is computerised.

These views were expressed by tax experts, who wished not to be identified, in response to queries made by Dawn regarding potential of direct levies on the agricultural sector. They further suggested that all exemptions on farm tax should be withdrawn in the next budget, as this encourages evasion of tax.

At present land holdings of 16 acres (irrigated) and 32 acres (non-irrigated) enjoy exemption from farm tax. Consequently, many big landlords are misusing the incentives by dividing their farm estates into small holdings to escape the net.

The tax experts suggested that a tax with a nominal rate must be imposed on every farmer, small or big, which would help agriculture contribute its due share to the GDP. Income from farm tax contributed Rs142.2 million during the first nine months of the current fiscal against a target of Rs400 million compared to Rs142.7 million generated during the same period last year.

Another step that could raise the provincial revenue is fast computerisation of the land record. The Sindh Revenue Board is working on the project under a World Bank programme but its progress is slow. The land record in only four districts — Hyderabad, Mirpurkhas, Sukkur and Khairpur — was computerised during 2004. “There is a need to expedite the work so that every farmer, small or big, could be brought under the tax net,” a senior official at the provincial finance ministry said.

The major revenue spinners of the province from where an amount of Rs9.451 million was collected during the first nine months of the fiscal year 2005-06 as compared to Rs8,607.6 million last year are: Infrastructure cess Rs3,354.3 million; stamp duty Rs2,625.1 million; registration and transfer of property Rs563.3 million; provincial excise Rs819.1 million; motor vehicles Rs1,384.7 million; cotton fee Rs116.9 million; hotels Rs95.5 million; professions, trades and callings Rs139.2 million; electricity duty Rs95.9 million; and land revenue (irrigation) Rs83.5 million.

Income from property tax has been transferred to the districts government while its collection is the responsibility of the provincial government. Tax planners complain that in the presence of a number of federal taxes, the province is left with little taxation space.

Citing an example, they say the province charges a nominal amount of Rs100 per year as tax on professionals and similarly the rate of tax on companies is only 10 per cent. The government cannot charge more because these people are already heavily taxed by the federal government, they add.

The total tax collection during the first nine months of the current fiscal stood at Rs9,451.80 million as against Rs8,607.60 million in the same period last year, registering an increase of 10 per cent. The collection was against budget estimates of Rs12,710.90 million for 2005-06 and Rs11,080 million for 2004-05.

According to the experts, the province urgently needed modern automated tax collection machinery on the pattern of the CBR which could increase its revenue manifold.