Reduction in the rate of the property tax is under consideration and it would be brought at 10 percent instead of 25 percent, said Adviser to the Chief Minister of Finance and Taxation Zia Haider Rizvi.
The adviser was speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Wednesday.
Rizvi said that the survey of the property throughout the province would be conducted to enhance the scope of property tax collection. He said that the finalisation of the rate would be made only after taking the masses on board. He said that excise and taxation department would also coordinate with LCCI in this regard.
The adviser said that the discretionary powers of the tax inspectors would also be curtailed and the system would be made more effective through improvements in the implementation mechanism. He also agreed with the proposal of the LCCI and promised to include LCCI representatives in Evaluation Committee of the Punjab government for property tax.
Speaking on the occasion, the LCCI president said that the tax machinery requires major overhauling and revamping. He said that reforms of major taxes such as property tax were not implemented as the same had caused additional financial burden on taxpayers at a time of high inflation and economic downturn.
However, creation of PRA is an extremely important policy of Punjab government, which is expected to improve tax administration and management besides plugging leakages in the revenue collection.
He said that the LCCI members have some serious concerns relating to Professional tax. In FY 2011-12, the Budget Estimate for Professional Tax was Rs 510 million, which was revised to Rs 488 million. In FY 2012-13, the budget estimates are Rs 887 million, which is 97 percent higher than the preceding year. It is an over ambitious target.
The LCCI president said that the share of professional tax in total collection is just 4.76 percent whereas the cost of its collection is too high and the taxpayers are also subject to get blackmailed at the hand of unscrupulous tax officials. Tax officials harass the taxpayers therefore very little portion goes into national exchequer as corruption eats up its major share.
It is, therefore, proposed that professional tax should be abolished and the same may be collected under the head of tax on services. Iftikhar said that there should be no direct interaction between the tax collectors and taxpayers.
In FY 2011-12, the Budget Estimate for Property Tax was Rs 5.58 billion, which was revised to Rs 4.30 billion. In FY 2012-13, the Budget Estimates are Rs 5.91 billion, which is around 32 percent higher than the preceding year.
The business community has a lot of reservations concerning property tax. Value assessment of property is done for covered area and in terms of per square feet. In some cases where shops are rented to shopkeepers some time ago like 10 to 20 years, the tax exceeds the rent because the rate of tax varies on the basis of area.
If any organisation is maintaining office away from the main road, the tax authorities unfairly apply the same rate of property tax, which is applicable on main commercial road.