Punjab gets lion’s share in budgetary distribution
Punjab got lion’s share of 51.74% in budgetary distribution of resources among the federation and provinces while Sindh’s share was 24.55% and 14.62% and 9.09% share would be distributed to Khyber Pakhtunkhwa and Balochistan respectively.
According to the Budget Brief, the province-wise ratios were based on multiple indicators including population 82%, poverty or backwardness 10.3%, revenue collection or generation 5% and inverse population density 2.7%.
In distribution of revenues, the divisible pool taxes consisted of taxes levied and collected by the Federal government and these taxes include taxes on income, wealth tax, capital value tax, taxes on sales and purchase of goods imported, exported, produced, manufactured or consumed, export duties on cotton, customs duties, federal excise duties excluding the excise duty on gas charged at well-head and any other tax which might be levied by the federal government.
Around 1% of the net proceeds of divisible pool taxes should be assigned to the government of Khyber Pakhtunkhwa to meet the expenses on war on terror.
The federal government would guarantee that Balochistan province receive the project sum of Rs83 billion from the provincial share in the net proceeds of divisible pool taxes in the first year of award.
Each province would be paid in each financial year as a share in the proceeds of the total royalties on crude oil an amount which bearded to the total net proceeds the same proportion as production of crude oil in the province in that year bear to total production of crude oil.
Hike in taxes on luxury homes okayed
The Punjab government has decided to increase tax on luxury homes in its budget for the next financial year.
Meanwhile, the Finance Department has rejected the Excise Department's proposal to introduce new property tax rates through which the government was to receive an additional 18 billion rupees in annual taxes.
No increase in property tax will be introduced in the next budget of Punjab while the current rates of registration fee and token tax will remain the same.
It is proposed to increase the tax on luxury houses built after July 1, 2022 by Rs100,000 per kanal.
The Resource Mobilization Committee has also approved the proposal of annual token tax schedule table in proportion to the power of electric vehicles.
In addition, the Finance Department has decided to reduce the revenue collection target of the Excise Department.
The revised target will be communicated to the Excise Department in the next few days.
The revised target is likely to be the tune of Rs38.2 billion or Rs39 billion.
The tax recovery of the Excise Department is going well, and whatever target the Finance Department sets its sight on, the Excise Department will meet it 100 percent by June 30.
The Punjab Resource Mobilization Committee (RMC) has given its initial approval to the Excise Department for the new financial year 2022/23.
The Excise Department had proposed implementing a new valuation table of property tax under the new tax survey through which an additional tax of Rs18 billion was to be collected annually.
The Finance Department has decided to maintain the existing rates of property tax and vehicle tax in the next financial year.
According to the proposal approved by the Resource Mobilization Committee, the new table of token tax for electric vehicles will be something like this: lifetime token tax (one time) of Rs15,000 will be imposed on vehicles up to 59kW; Rs1,800 per annum for 60 to 76kW vehicles; Rs6,000 per annum for 77 to 88kW vehicles; Rs9,000 per year for 89 to 118kW vehicle; Rs12,000 per year for 119 to 147kW vehicles while a token tax of Rs15,000 will be imposed on vehicles of 147kW and above.
In Lahore, a proposal has been approved to increase the maximum tax on houses from 2 kanals to 7 kanals from Rs200,000 to Rs300,000 per kanal.
It is proposed to increase the tax rate on houses of 8 kanals and above from Rs300,000 to Rs400,000.
In the districts with divisional headquarters, it is proposed to increase the rate of luxury tax on houses of 2 to 7 kanals from Rs150,000 per kanal to Rs250,000 while it is proposed to increase the rate from Rs250,000 to Rs350,000 on 8 kanals and above.
In other districts, it is proposed to increase the tax on 2 to 7 kanals from Rs100,000 to Rs200,000, while on 8 kanals and more it is proposed to increase it from Rs200,000 to Rs300,000.
Published in The Express Tribune, June 11th, 2022.