Excise department works out new trap to catch defaulters

Proposes amendments in existing Property Tax Act which are currently being reviewed by the cabinet committee

LAHORE: The Department of Excise and Taxation in Punjab has created a brand new trap to collect taxes from defaulters in the province. Through an amendment in the Property Tax Act, which is awaiting cabinet committee blessings, the provincial tax body, aims to secure the authority to seal assets owned by defaulters.”

The country cannot run without taxes. We are trying to increase the tax net and hope it would eventually eliminate tax evasion,” said Provincial Minister for Excise and Taxation Hafiz Mumtaz Ahmed.

“Amendments in the law will help improve the tax net,” the minister added. If the proposed changes come into force, all tax exemption categories will appear on the back of the challans. In addition to that, the tax collection body is also mulling over reviving its defunct collection unit. During a court hearing two years ago, the taxation department received a severe blow. For decades the body has sealed properties and assets owned by tax defaulters, but, mostly without its authority clearly defined in the excise department’s laws.

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In its ruling, the court barred the department from seizing properties owned by defaulters, hampering the department’s ability to recover taxes. Shortly after that, the excise department proposed changes in the property tax laws and dispatched them to the cabinet committee. The proposal included a change in the process of appeals and the department’s authority to seize assets owned by those who decide to avoid taxes. According to details available with the Express Tribune, the cabinet committee is currently reviewing the proposed changes.

At the request of the local government secretary, the changes will not be implemented before the beginning of the new local government’s term. With an amendment in section 16 of the Property Tax Act 1958, the Department of Excise and Taxation now has the authority to seal assets owned by those who dodge the government.

Under the current rules, a citizen has the right to file an appeal of objection or exemption at the time of the tax survey. To ensure tax evaders face the penalty for circumvention of the system in the future, the department also has the approval to utilise the Farid Court Excise office as a prison.

Additionally, the department is also considering the plan to revive its authority to arrest defaulters who refuse to pay their dues. Property tax figures are a small portion of the total provincial tax collection in spite of the increase in investment in urban property. According to the last budget document, property tax collection remains around six per cent of provincial tax revenues. 

Published in The Express Tribune, December 11^th, 2019.