PESHAWAR, April 23: The Khyber Pakhtunkhwa government is lobbying for having an integrated system for collection of token tax on vehicles, registered in any province, to help improve its dwindling tax recoveries. Dawn

For this purpose, the Excise and Taxation Department, the prime tax collecting agency of the province, has approached its counterpart departments in Sindh and Punjab for working out a mechanism to facilitate the token tax collection, an official told . Under the current arrangement, the token tax is payable in a province where a vehicle has been registered and no other agency is authorised to collect this annual levy. This has been one of the major taxes contributing to the provincial budgets.

“Any change in the existing token tax collection is not acceptable to other provinces, which not only causes inconvenience to the taxpayers, but also deprive the Khyber Pakhtunkhwa of a due share,” said the official.

Citing official estimates, he said that close to 40 per cent vehicles plying in Khyber Pakhtunkhwa had been registered mainly in Punjab and Sindh. “While these vehicles contribute to the degradation of our road infrastructure, they yield nothing in terms of revenue to the KP's kitty,” he explained.

He said that the registration of new vehicles in Khyber Pakhtunkhwa was on decline for the last couple of years, as any vehicle bearing the number plate issued from Khyber Pakhtunkhwa Excise and Taxation Department was suspected whenever they travel outside the province. Token tax is an integral part of indirect taxes, which the provincial government collects annually. However, according to estimates the tax collecting agency has not been able to increase its collection for the last couple of years rather it observed negative growth.

In financial year 2009-10, the recovery target for this levy was Rs1.104 billion, but net collection by end of the year was only Rs804 million. Similarly, for the fiscal year 2010-11 the target under this head had been fixed at Rs891 million, which is likely to be revised downward because of less than projected recoveries, the official said.

“Motorists with KP number plates are discriminated against when they go to Islamabad or elsewhere in Punjab or Sindh, so they do not prefer to get their vehicles registered here. Even the market value of vehicles registered in Islamabad or Lahore is higher than those registered here,” he noted.

Apart from payment of token tax, the Khyber Pakhtunkhwa government also intends to get the provinces on board on transfer of registration of vehicles from one province to other.

He said that the excise and taxation departments of Punjab and Sindh had expressed their unwillingness to accept the plan of Khyber Pakhtunkhwa tax agency for the simple reason that it could curtail their revenue.

The official said that now the provincial government wanted to take up the matter at the Council of Common Interests to get a decision for the transfer of token tax payment and registration of vehicles to the province where the vehicle was plying. “In a way, we are lobbying for a system to be applied on a country level,” he said.