PESHAWAR, Sept 5: The provincial assembly’s unanimously adopted resolution, seeking undoing of recently promulgated ordinance which requires Rs2 per kg cess on the open market transactions of tobacco, if implemented, would cost Rs50m annual revenue loss to the provincial exchequer, according to official sources.
The new levy had earlier been introduced under an act of the provincial assembly in June last.
However, later in the absence of the NWFP governor Syed Iftikhar Hussain Shah — who was on leave last month — the acting governor Bakht Jehan Khan, speaker of the provincial assembly, promulgated a new ordinance introducing important changes under the scheme of things introduced in June last in the form of a finance bill.
Following the passage of the finance bill under which the open market transactions of tobacco were brought under the tax net in June last, the provincial authorities concerned had awarded contract — after fulfilling basic official requirements — to a private party for the collection of the new levy.
Total value of the contract was of Rs50m — the revenue the provincial government had committed with the World Bank — of which the contractor, said the source, had deposited over Rs10m.
Not only that the unanimously adopted resolution would negatively affect the provincial revenue, its implementation would further strain the NWFP government working relationship with the World Bank.
The cess had been executed as part of conditionalities of an important multi-million-dollar loan agreement with the World Bank.
“On the other hand, if the resolution was not implemented the provincial government would have to face a difficult situation within the House which adopted the resolution in a rare show of unity between the treasury and opposition members,” said a senior government functionary.
In its agreement with the World Bank the provincial government had committed to introduce cess on the open market transactions of tobacco to raise additional annual revenue of Rs50m.
However, a member of the ruling alliance in the NWFP when contacted on request of anonymity told this scribe that the resolution was not likely to be implemented as was the case with the over 65 resolutions unanimously adopted earlier by the provincial assembly since its creation in October 2002.