Sindh govt eyes Rs2 to 2.5 billion in ‘flood tax’

Sindh government has set a ‘flood tax’ collection target of 2.5 billion from people who were unaffected by the...

KARACHI: The Sindh government has set a ‘flood tax’ collection target of Rs2 to 2.5 billion from people, who were unaffected by the floods.

The decision was made at a meeting held under the chairmanship of the finance minister on Tuesday. The government considered several options to impose a flood tax on the agriculture sector, property and luxury cars. It is expected that a notification in this regard will be issued by the board of revenue this week, after which the collection process will begin.

The meeting was attended by the adviser to the Sindh chief minister on planning and development, Kaiser Bengali, senior member of the revenue board, Ghulam Ali Shah Pasha and secretaries of the education, finance and agriculture departments.

The decision to impose the tax was made on the advice of President Asif Ali Zardari, who had suggested that Rs7 billion should be collected from people across the country.

The participants also discussed options to impose a one-time flood tax on bungalows spread across 500 square yards or more, expensive flats, 1300cc or bigger cars, big plots and agricultural lands.

Sindh Chief Minister Qaim Ali Shah had given specific instructions to the finance minister, the revenue board, agriculture department and excise and taxation department to come up with a viable strategy.

According to official sources, the Sindh government plans to impose an additional tax of Re1 per 40-kilogramme of sugarcane crops. Meanwhile, an additional tax will also be imposed on cultivation of wheat and cotton. At least Rs500,000 will be collected in taxes from industrialists and landowners, which will be used for the rehabilitation of flood survivors.

However, the sources added that agriculturalists have opposed the idea of imposing the flood tax on agricultural land saying that cotton harvest is almost over in Sindh, so the move would be useless. Moreover, wheat crops have been damaged in the floods and there might be a shortage in the coming months. If a tax is imposed on wheat cultivation, the sector might be further affected, leading to a possible food shortage in the country.

The government also suggested that owners of houses, which are 500 square yards and 1,000 square yards or more, should be taxed Rs50,000 and Rs100,000, respectively.

Some of the participants at the meeting criticised this idea on the grounds that it will spread unrest among citizens and negatively affect the collection of millions of rupees in ordinary taxes. Another suggestion was to raise petrol prices by Rs2. However, President Zardari had vetoed the idea, saying that an increase in fuel prices will have an impact on the entire country, while the aim is to collect taxes only from those who have not been affected by the floods.

Published in The Express Tribune September 15^th, 2010.