PESHAWAR, Jan 6: The Central Board of Revenue is likely to record a decline in its collection under the head of income tax from the Frontier if the provincial government decides to abolish the motor vehicle tax in line with a resolution adopted by the NWFP Assembly.

The provincial legislature unanimously adopted a resolution on Thursday last, asking the government to abolish property tax, motor vehicle tax and licence fee in accordance with the recommendations of the Council for Islamic Ideology.

Finance managers of the province said if the resolution were implemented, it would cast a negative impact on the province’s resources which were likely to be slashed by around Rs400 million. Moreover, federal taxes collected from the province also suffered a huge loss.

The finance managers apprehended that the CBR would record a substantial decline in its income tax recoveries from the NWFP if the assembly resolution was implemented.

The CBR, they added, would not receive the amount which the vehicle owners used to deposit (under the said head) at the time of paying motor vehicle tax.

Talking to Dawn, the officials apprehended that apart from causing financial losses to the NWFP government, the implementation of the decision would also have political repercussions for the provincial government.

“If the government does not implement the decision to avoid the expected financial losses, anyone can go to the court against the collection of any of the three levies after a certain period of time,” said a senior official.

Though the NWFP government is trying to avoid implementation of the resolution, the Speaker of the provincial assembly, Bakht Jehan Khan, said that the resolution had a binding effect on the provincial government, as it had been adopted unanimously by the House.

Official sources apprehended that the resolution could jeopardise the revenue generation under the said three heads as the taxpayers might resist collection of the three levies required to be abolished in accordance with the assembly’s resolution.

They said not only the Rs3.6 billion tax collection target set for the province for the current year would become difficult to achieve, the annual growth rate target fixed under the three-year medium term budgetary framework to improve collections from provincial taxes would also remain elusive.