Excise department wakes up from slumber as fiscal year nears close

LAHORE:

As the public exchequer dries up, the government seems to have left no stone unturned to increase tax collection, so that it can successfully complete an International Monetary Fund (IMF) review; however, it might be too little too late.

Since, an increase in tax collection is at the forefront of the IMF’s demands before it releases a tranche of aid, evidenced by the recently passed mini-budget in the National Assembly, the Punjab Excise and Taxation Department has decided to freeze the bank accounts and vehicles of defaulters.

The move comes at a time when the department has only managed to collect upwards of Rs 28 billion in taxes and there is growing fear that with only 4 months remaining in the current fiscal year, it will not be able to meet the Rs 42 billion target. Out of the total figure, Rs 26 billion has been earmarked as the property tax target of which only Rs 10 billion has been collected so far. When asked why the department had sprung into action so late to collect taxes, Akram Ashraf Gondal, former director general of the Excise and Taxation Department Punjab, said that the department was inefficient.

“The lack of coordinated departmental planning and monitoring mechanisms causes government departments to always fall short of their tax goals,” remarked Gondal, adding that it was concerning that property tax collections were meagre this year. Concurring with Gondal, Dr Salman Shah, former financial adviser to the Punjab government, opined that departmental incompetence was a major factor in another year of not meeting the tax collection target. “This has become a recurring theme, the officials start off the financial year with a lax attitude and spring into action during the last few months.”

Dr Shah’s assessment holds weight as the Director General (DG) for Excise Punjab, Muhammad Ali, has taken notice of the dismal tax collection performance now when the fiscal year is drawing to a close. In this regard, the DG has sent a letter to all Regional Directors, in which he has expressed his displeasure that officers are not using the vast powers given by law to collect property tax. In the letter, a copy of which is available with The Express Tribune, the DG has directed that under Section 16, Clause 1(1), of the Property Tax Act 1958, the bank accounts of tax defaulters should be seized and their vehicles be sold. However, it seems that the excise officials have an uphill task on their hands, as the inflation-battered populace of the province’s capital, Lahore, is not happy about the new directives.

“Even though paying tax is our national duty, the government needs to realise that times are tough right now. Either we can pay taxes or feed our children three times a day during this period of double-digit inflation,” complained Bilal, a resident of the city. “The government should tax the rich not the poor.” Khalil Akhtar, another resident of Lahore, agreeing with Bilal, informed that he lives in a 10 marla house and the amount of property tax put on it is disproportionate.

“I am worried my bank account will be sealed.” Just like Akhtar, Rabia Ikram is also worried that the new directives issued by the DG, will impact the already struggling middle-class adversely. “Sealing bank accounts or seizing vehicles will be the last nail in the coffin of the already inflation-battered populace. The government should keep our existing plight in mind before enacting measures which will further crush us,” implored Rabia while talking to The Express Tribune.

Published in The Express Tribune, March 3^rd, 2023.