PESHAWAR, March 9: The NWFP land tax and agriculture income tax ordinance 2000, failed to improve recoveries and revenue base as the provincial government is set to miss the current fiscal year’s revenue target with a big margin, according to official sources.

Well-placed government functionaries told Dawn that as a result of greater incentives to the farmers community and built-in loopholes in the new piece of law caused leakages, rendering it (the ordinance) ineffective — at least in its first year of application.

At the close of first seven months of the current financial year NWFP raised Rs23.7 million revenue under the both components of the land tax and agriculture income tax ordinance 2000 — the law that was promulgated in July 2000 and got into effect in July 2001 due to delay in framing requisite rules to make it applicable.

The amount collected, sources said, was only 13 per cent of Rs180 million annual target the provincial government had set for itself to raise under this vital head during the financial year 2001-02.

The province is reeling behind by over Rs81 million in comparison with Rs105 million target it should have achieved on proportionate basis at the close of first seven months of the current fiscal year.

“In view of the recoveries made there appears to be no possibility of NWFP achieving the annual target,” said the official.

One senior officer held the “poor grip” of the new law responsible for massive shortfall.

“Though the fact that the new recovery system got into effect with the introduction of the devolution of power plan, on August 14 last, and reasonable improvement has been recorded in terms of revenue generation, these are the increasing incentives that are causing revenue shortfall under the agriculture income tax head,” said sources.

Out of Rs23.7 million total amount raised by the end of the seventh month of the current fiscal, a greater sum of Rs2.27 million has been raised under the land tax component and over Rs900,000 under the agriculture income tax component of the new law.

The government’s bids to make the big land lords pay income tax under the new law — by keeping the owners of small landholdings in the net of land tax — failed to bring the desired results as very few of the not-so-many big landlords opted to pay tax on their agriculture income.

“The government was very much clear that it is not going to meet Rs180 million annual revenue target in view of the poor performance of the new law,” said a tax collector on the request of anonymity.