Overhaul of Punjab’s property tax collection on the cards
Pakistan loses more than three hundred billion rupees to tax evasion annually. Any effort to control this humongous amount will entail technological innovations in duty collection methods and building public trust to increase taxation revenue. Punjab is making such an attempt by remodeling the current property tax collection system and decreasing direct contact of Excise staff with customers.
According to details available with The Express Tribune, Director General Excise and Taxation Punjab, Saleha Saeed, has submitted a proposal to Secretary Excise Punjab, Waqas Ali Mahmood, to change the property tax assessment system in the province. Once approved, tax will be collected in proportion to the market value (capital value) of the building or plot instead of the annual rent (rental value). The use of technology, department insiders said, will reduce irregularities and make the process more transparent.
In her letter to the secretary, the director general said property tax can be assessed based on capital rates fixed by the Federal Board of Revenue (FBR) and the deputy commissioner. She said that the present system is the cause of various irregularities, forgery, and corruption, resulting in huge losses to the exchequer.
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Taking advantage of the ambiguity in the current system and the huge difference in rental value, employees, in cooperation with the taxpayers, manipulate the tax assessment therefore if the proposed system is adopted by the chief minister, it will not only eliminate corruption and counterfeiting, but will also significantly increase government revenue.
In addition, the director general excise has proposed to hire a third party, by open bidding, instead of the excise department to conduct an impartial and transparent survey for the preparation of the Tax Valuation Table. According to the Punjab Finance Act 1998, the excise department conducts a sample survey in different areas and determines the rent and then according to the same survey, the valuation table is applied for five years by dividing the different areas and their rents into categories.
Officials familiar with the details said the present system is neither transparent nor user friendly. “Under the existing system, officials of the excise department conduct the survey, calculate the tax, and hear the appeals against the tax themselves,” said one officer, who was speaking on the condition of anonymity. However, they have been accused of not having the professionalism to conduct a sample survey accurately. The last survey was conducted by the excise department six years ago in 2014 while the previous survey was conducted nearly 13 years ago in 2001.
Published in The Express Tribune, June 24th, 2021.