Editorial : Tax or no tax? Monday, April 11, 2011

At first sight the news that the Punjab government is to enforce an ‘income-based’ tax on parts of the agricultural sector could be expected to draw applause from economists across the land. At last, the long-sought widening of the tax footprint to include the agricultural sector is here. Celebrations all around. Or not. Apparently, officials have been collecting data for months and doing all sorts of preparatory work and training in order to prepare themselves for their first engagement with the landowners whose holdings exceed 50 acres. They are going to be approaching the ‘big landlords’ of Punjab, presumably with more than a little caution, in order to hand them a simple self-filled self-assessed form which on completion will be returned to the revenue staff. Or not.

Anybody who thinks that this is going to make any significant contribution to the tax revenues of Punjab is living in cloud-cuckoo land. What is being proposed is the enforcement of legislation that has been on the statute books in one form or another since 1997. On the books it may be, but enforced it has not been – or where it has been imposed, it is highly selective and not all inclusive. The primary legislation is the Punjab Agricultural Income Tax Act, 1997, amended in 2001 when the criterion for taxation was shifted from ‘land-based’ to ‘income-based’ in order that those with more fertile lands paid more tax than those with less fertile lands – which seems a fair way of doing things. Research by this newspaper reveals that the gentlemen of the Board of Revenue, ever mindful of the powerful farming lobby, have only been charging a nominal land-based tax and not the far more fruitful, in revenue terms, income-based tax. The BOR conducted a sample survey of four large landowners in south Punjab, discovering that they had collectively managed to avoid paying Rs13.916 million in taxes. Data held by the BOR shows that there are 6,555 landowners with holdings of similar size, and it is not unreasonable to assume that they have not been rushing to pay their taxes either. We wish the best of luck to the BOR in its endeavours, but handing a form to a landowner hardly constitutes enforcement. Now, if the BOR started to talk in terms of sequestration of the taxable portions of farm income then we might be a little more inclined to believe in enforcement as a reality. As things look today, we suspect that a lot of forms are going to sit a very long time in the ‘pending’ tray of landowners.

Source : http://thenews.com.pk/TodaysPrintDetail.aspx?ID=41078&Cat=8

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