The NWFP assembly, which unanimously adopted a resolution seeking the abolition of some of the important provincial taxes, is likely to cause an annual loss of Rs400 million to the provincial kitty, in addition to undermining the image of Muttahida Majlis-i-Amal-led government in the eyes of the international donor agencies.

The proceedings on January 2, last, were unique, due to the circumstances under which the resolution was adopted. It took the house less than half-an-hour to debate and adopt the resolution, while recommending the provincial government to abolish the property tax on self-occupied houses, the arm licence fee and the motor vehicle token tax, in compliance of the Council of Islamic Ideology (CII) recommendation. The move came as a big surprise which went against the MMA-led government, and was tabled by a member of the treasury benches, Pir Mohammed Khan, the most senior MPA from the MMA parliamentary group.

But for those who even had little knowledge about the repercussions, the assembly’s decision was stunning.

The resolution is required to be implemented by the government under clause (4) of Article 130 of the Constitution. If a resolution is unanimously adopted, it shall be binding on the provincial cabinet to implement the same as their collective responsibility under clause (4) of Article 130 of the Constitution,” read with section (2) of the Rule 135 of the NWFP Assembly’s Procedure and Conduct of Business Rules, 1988 - duly protected under the Constitution.

Clause (4) of Article 130 of the Constitution says: “The cabinet shall be collectively responsible to the provincial assembly”, meaning thereby that the provincial legislature would have every right to take to task the cabinet if it fails to take action in the fulfilment of the Assembly’s recommendation. Though the resolution is binding on the provincial government after being adopted unanimously, the government enjoys immunity to the extent that the Assembly’s Procedure and Conduct of Business Rules do not set any timeframe for the implementation of the resolution.

However, there is no denying the fact that the MMA-led NWFP government has no other choice but to implement the recommendation of the assembly — if it goes by the book. If it does not implement the same, then the Opposition Benches would be better placed to exploit the situation in their favour by giving the provincial government tough time. Some of the members of the ruling alliance may also join the opposition in such a situation.

They would be justified if the provincial government fails to implement a resolution based on a recommendation put forth by none other than the CII.

In this situation, the legislature has set an awesome task for the government to achieve. Implementation of the recommendation would mean that the provincial government loses approximately Rs400 million, annually. Non-compliance would make the life more difficult for the cabinet members inside the house.

For a government whose internal resources stands around Rs3 billion yearly, the move — if the resolution is implemented — would be a severe blow to the meagre tax base of the province.

Already, the MMA’s elevation to the corridors of power in the NWFP is being seen with suspicion. This is due to the religious parties’ ability to govern this backward province, where the private sector is finding it difficult to survive the recession and hardships have increased manifold after the 9/11 events in the US. The move would certainly add to the constraints of the resource-hit MMA-led government.

The NWFP’s total internal receipts for the 2002-03 financial year have been estimated at Rs3.6 billion. But the government is expecting to raise not more than Rs3 billion at the end of the financial year in view of the unsatisfactory performance of the provincial tax collection machinery in the recent past.

The resolution would not only inflict monetary blow but would also tarnish the political image in the eyes of the electorates, along with denting the credibility before the international donor community.

The resolution would not pass on any relief to the poor as the property tax is not the concern of the vast majority, as more than 40 per cent of the NWFP’s population is living below the poverty line.

Rather, the abolition of property tax would be a big concession for the upper class whose majority owns sprawling and luxury apartments and houses in the posh localities of Peshawar, Mardan, Abbottabad, Kohat, etc,.

Similarly, the licence fee and the motor vehicle tax is of no concern for the poor. Again, this would benefit the owners of luxury cars. The move is bound to injure the government’s credibility.

The province had received the first tranche of Rs5.7 billion in July last from the Structural Adjustment Credit facility of the World Bank. The facility would continue to the province — in accordance with the loan agreement signed between the last provincial government and the World Bank — if the new setup succeeds in achieving the targets set for the current fiscal under the three-year roll-over medium-term programme. The expansion of the provincial tax base and increase in the overall size of the province’s own receipts make part of the bench-mark the provincial government is supposed to achieve during the current financial year.

The move would have negative effects for the district governments’ finances as this tax lies in their domain.

Out of the total amount collected in property tax around 85 per cent of it is transferred to the district government, whereas the remaining 15 per cent is retained as the collection charges.

Hence, the abolition of the property tax would mean that the district governments would lose a very important source of income.

Apart from all the ‘ifs’ and ‘buts’, the way in which the resolution was adopted clearly reflects internal differences between the members of the MMA’s parliamentary group in the NWFP assembly and the two major components of the alliance — the JUI(F) and the Jamaat-i-Islami (JI).

The ill-will hidden behind it is evident from the fact that it was tabled by a JI MPA, who himself has been holding the portfolio in the provincial ministry of excise and taxation during the last PML(N) government.

He never uttered a single word during his stint as the provincial minister against the three levies declared un-Islamic by the CII quiet long ago.