Punjab to rake in taxing from highway commercial buildings
Govt can generate additional revenue of up to Rs3 billion
Representational image. PHOTO: REUTERS
LAHORE:
The Punjab government has prepared a proposal to impose new property taxes on commercial buildings in the vicinity of highways and motorways all over the province. The proposal would allow the provincial excise and taxation department to collect additional revenue of up to Rs3 billion.
Under the proposal, motorways and highways will be divided into three categories with varying tax rates. Motorway service areas will be kept in category ‘A’, while area and nature of business will factor more heavily around GT Road and other highways. Furthermore, the excise department has also proposed increasing professional taxes on doctors, engineers, lawyers, and other high-pay, high qualification professions. The proposal will be presented to Punjab Chief Minister Usman Buzdar.
It has also been learnt that the taxation department wants to raise the minimum taxable amount for professional taxes from Rs100,000 to Rs500,000, but many federal and provincial-level members and planners of the Pakistan Tehreek-e-Insaf have also suggested doing away with the tax entirely.
The tax recovery target for excise and taxation this year is Rs37.6 billion, while the target for property tax is Rs12 billion.
Speaking to Express in this regard, Punjab Excise and Taxation Director General Akram Ashraf Gondal said that there has been an unusual, rapid increase in commercial activities within the vicinity of provincial highways and motorways and business worth billions is being carried out there, yet no property tax is imposed on those commercial buildings, even though similar businesses along city streets are part of the property tax net. He said the department wants to address this disparity and increase government revenue.
“We will divide highways into categories. If we take the example of motorway service areas, many business transactions take place here so we will request the government to keep motorways service areas in category ‘A’, while we will divide highways into categories basing on location and business volume," he said.
Professional Tax was first imposed in Punjab in 1964. A Rs30 tax per category was initially recoverable. In 1977, six new categories of professional tax were made and one per cent of total income was set as the professional tax rate, with the maximum tax payable set at Rs5,000. In 1999, the government further expanded the professional tax and including new fields while introducing categories to replace the one per cent flat rate. The maximum tax payable was also increased, rising to Rs100,000.
The excise department’s provincial resource mobilisation committee had also suggested that the annual token tax imposed on cars be abolished and the motor vehicle tax amount be adjusted into a tax on petrol and diesel, however, this suggestion was rejected, principally because it could run afoul of federal tax collection rules.
The excise department is also proposing a carbon emissions tax to petroleum products, which could generate an estimated Rs12 billion in annual revenue at a rate of Rs1 per litre.
If approved, the government could be in a position to withdraw numerous road taxes such as token taxes, toll fees, and transfer fees on highways. During the past year, the government had collected overall revenues in excess of Rs9 billion on account of toll fees, token taxes and transfer fees.
The Punjab government has prepared a proposal to impose new property taxes on commercial buildings in the vicinity of highways and motorways all over the province. The proposal would allow the provincial excise and taxation department to collect additional revenue of up to Rs3 billion.
Under the proposal, motorways and highways will be divided into three categories with varying tax rates. Motorway service areas will be kept in category ‘A’, while area and nature of business will factor more heavily around GT Road and other highways. Furthermore, the excise department has also proposed increasing professional taxes on doctors, engineers, lawyers, and other high-pay, high qualification professions. The proposal will be presented to Punjab Chief Minister Usman Buzdar.
It has also been learnt that the taxation department wants to raise the minimum taxable amount for professional taxes from Rs100,000 to Rs500,000, but many federal and provincial-level members and planners of the Pakistan Tehreek-e-Insaf have also suggested doing away with the tax entirely.
The tax recovery target for excise and taxation this year is Rs37.6 billion, while the target for property tax is Rs12 billion.
Speaking to Express in this regard, Punjab Excise and Taxation Director General Akram Ashraf Gondal said that there has been an unusual, rapid increase in commercial activities within the vicinity of provincial highways and motorways and business worth billions is being carried out there, yet no property tax is imposed on those commercial buildings, even though similar businesses along city streets are part of the property tax net. He said the department wants to address this disparity and increase government revenue.
“We will divide highways into categories. If we take the example of motorway service areas, many business transactions take place here so we will request the government to keep motorways service areas in category ‘A’, while we will divide highways into categories basing on location and business volume," he said.
Professional Tax was first imposed in Punjab in 1964. A Rs30 tax per category was initially recoverable. In 1977, six new categories of professional tax were made and one per cent of total income was set as the professional tax rate, with the maximum tax payable set at Rs5,000. In 1999, the government further expanded the professional tax and including new fields while introducing categories to replace the one per cent flat rate. The maximum tax payable was also increased, rising to Rs100,000.
The excise department’s provincial resource mobilisation committee had also suggested that the annual token tax imposed on cars be abolished and the motor vehicle tax amount be adjusted into a tax on petrol and diesel, however, this suggestion was rejected, principally because it could run afoul of federal tax collection rules.
The excise department is also proposing a carbon emissions tax to petroleum products, which could generate an estimated Rs12 billion in annual revenue at a rate of Rs1 per litre.
If approved, the government could be in a position to withdraw numerous road taxes such as token taxes, toll fees, and transfer fees on highways. During the past year, the government had collected overall revenues in excess of Rs9 billion on account of toll fees, token taxes and transfer fees.