Punjab Assembly approves taxes on vacant plots, imported cars

Services brought under tax net include cosmetic surgery and hair transplants

LAHORE: The Provincial Assembly on Monday passed the Punjab Finance Bill 2016 amid reservations from the Opposition benches.

The bill features new taxes on vacant real estate plots, imported cars (above 1300cc) and three new services.

The new services brought under the tax net was cosmetic surgery and hair transplants (excluding services extended to acid burn victims); warehouses and cold storages and packaging and handling.

The bill imposed a property tax on vacant plots. The tax will be applicable on vacant plots held in possession for over two years. The bill mentioned expanding property tax base and discouraging retention of vacant plots as reasons for the new tax.

The law imposed a one-time tax on imported cars registered after June 30, 2016. It levied a tax of Rs70, 000 on cars with engine capacity between 1,300cc and 1,500 cc; of Rs150,000 on cars between 1,500cc and 2,000cc; of Rs200,000 on cars between 2,000cc and 2,500cc and Rs300,000 on cars above 2,500cc.

The new tax measures were met with severe criticism from the Opposition benches. Invoking Clause 98 of the Rules of the Procedure of the Punjab Assembly (allowing discussion on principles of the finance bill), Leader of the Opposition Mian Mehmoodur Rasheed condemned the government for imposing what he called worst indirect taxes. He criticised the 16 per cent tax on marriage halls and marquee services and a new property tax on vacant plots. On a tax on imported cars, he said there was no reason to tax cars falling in the 1,300cc-1,500cc category. He said rate of tax on luxury cars should be increased.

Others who expressed their criticism of the new taxes were Shunila Ruth, Mian Aslam Iqbal, Dr Nosheen Hamid and Qazi Ahmad Saeed. Ruth said that the Punjab Revenue Authority was operating without a board of directors and without a legal mandate.

Taking a jibe at the property tax on vacant plots, Mian Aslam Iqbal asked if the government would collect the tax on plots only in schemes managed by the Lahore Development Authority (LDA) or also in the Defence Housing Authority and other cooperative housing societies.

Finance Minister Ayesha Ghaus Pasha dismissed Opposition’s criticism that the new taxes would burden income-poor households. She said it seemed that the Opposition members had either not read the finance bill or failed to understand it. She said the govenrment’s focus had been on broadening of the tax base. She said taxation system was being automated to plug administrative loopholes.

On the new property tax on vacant plots, Pasha said it would help bring an end to speculative trade in real estate. The poor did not engage in such transactions, she said. On the tax on imported cars, she questioned what sort of poor people could buy such cars. Pasha said tax collection in the province had gone up by over 30 per cent in 2015-2016. This was the highest increase in tax revenue among the provinces, he said.

On Monday, the House passed the Punjab Local Government (Fourth Amendment) Bill 2016 despite several Opposition members’ reservations on it. The amended law would empower a rural union council with urban characteristics to levy property tax in its jurisdiction as per the Punjab Urban Immovable Property Tax.

The session also featured a debate with Law Minister Rana Sanaullah and PPP’s Qazi Ahmad Saeed on delay in establishment of local governments.

Sanaullah said Punjab was the first province where the Local Government Act had been enacted. He said delimitation of only 236 UCs (of 8, 000 in the province) had been challenged in the courts. He said special seats had been set aside for deputy mayors and vice chairmen in accordance with population.

On Saeed’s remark that election through show of hands would jeopardise transparency, Sanaullah said the PPP government in Sindh had adopted the same procedure for election. He said the electoral process for the establishment of local governments could be completed in a few weeks if the Opposition agreed to withdraw its petition on the matter.

The Schedule of Authorised Expenditure for the Year 2016-2017 and the Punjab Civil Courts (Amendment) Ordinance of 2016 were laid in the House. The Punjab Blood Transfusion Safety Bill of 2016 and the Punjab Revenue Authority (Second Amendment) Bill of 2016 were also introduced.

The session will now continue on Tuesday morning with a debate on the Supplementary Budget for 2015-2016.

Published in The Express Tribune, June 28^th, 2016.