PESHAWAR, March 17: The World Bank has intimated its concern to the NWFP government over the negative financial impact of the provincial assembly’s unanimously adopted resolution. It observes that, if implemented, the move would cost considerable annual revenue losses to the province, according to sources.

The bank, which is financing the NWFP’s three-year rollover reforms programme, has estimated that the province would lose annual revenue between Rs380 million and Rs400 million, if the resolution was implemented.

On February 20, 2003, the MMA-dominated NWFP assembly unanimously adopted a resolution seeking abolition of property tax on self-occupied houses, motor vehicle tax on private cars and arms licence fee, terming them as against Islam in accordance with a recommendation of the Council of Islamic Ideology (CII).

According to its medium term budgetary framework (MTBF) — submitted to the World Bank in connection with the three-year rollover reforms programme — NWFP is supposed to raise Rs140 million from the urban immovable property tax and another sum of Rs522 million from the motor vehicle tax during the financial year 2002-03.

Whereas, a sum of Rs90 million has been estimated to be raised from the arms licence fee during the current financial year in accordance with the NWFP government’s annual budget statement.

“Though the provincial government has not yet initiated the move to do away with the three levies in fulfilment of the unanimously adopted resolution of the provincial assembly, the move, if implemented, would certainly cost dearly to the province’s internal resource base,” said an official of the excise and taxation department, NWFP.

The World Bank, said the sources, had recently taken up the issue with the provincial government. The province, according to the World Bank’s estimates, would lose some 40 per cent of the revenue under the urban immovable property tax head and 30 per cent of the amount generated every year through motor vehicle tax.

Similarly, added the sources, arms licence fee receipts would also get slashed considerably.

An internally carried out exercise by the excise and taxation department, NWFP, also reflected the annual revenue loss of about Rs400 million if the resolution was implemented, said the sources.

Senior finance managers of the province told Dawn the financial impact of the move would certainly be covered up through taxation measures and revision of rates of urban immovable property tax (other than self-occupied houses) to avoid decline in the internal receipts of the province as was required under the World Bank loan agreement. NWFP has committed to raise provincial’s own receipts by 40 per cent between the financial years 2002-03 and 2004-05.

However, improvement in the PORs level appears to be a Herculean task in the presence of unsatisfactory performance by the provincial tax collection machinery.

The province, according to the sources, was not likely to meet the Rs3.6 billion PORs target for the current financial year after tax collectors poor show in first six months.

“In a situation when the province is finding it difficult to achieve the benchmarks set for the current financial year, expecting it to raise the PORs by 40 per cent by the end of 2004-05 would be a far cry,” admitted an official.

Despite the fact the province raised Rs500 million less than the amount it should have raised through PORs during the first six months of the current financial year, a senior finance manager of the NWFP expressed the hope that the situation would improve in the months to come, particularly during the last quarter of the current fiscal year.