LAHORE - The Punjab government has decided delegating tax collection powers including agri income tax and property tax to the Punjab Revenue Authority (PRA) by phasing out the Punjab Board of Revenue and Excise & Taxation Department in the next two years.
Officials in the Punjab Finance Department revealed The Nation that the government had decided merger of the Punjab Excise & Taxation Department and the Punjab Revenue Board into the PRA and shift their responsibility of revenue collection to the newly-constituted tax authority, as the performance of the old tax agencies’ has been dismal despite spending heavy budget on huge staff, offices and buildings of these departments.
The PRA collected Rs.44 billion in fiscal year 2013-14 with just seven officials and one office, having no field staff while Punjab Board of Revenue with human resource of over 5,000 could collect Rs35 billion and Excise & Taxation Department could generate Rs17.8 billion revenue with massive number of employees of around 4,000.
Presently, the Excise & Taxation Department and Board of Revenue are generating revenue through various types of levies including vehicle tax, property taxes and agri tax, land transfer fee and stamp duties respectively but their outcome is very low. On the other hand, the PRA collects tax only on services, but contributes more than 46.5 per cent of total tax revenues of the province despite serious challenges of human resource.
Finance Department officials said that PRA taxpayers’ numbers have crossed the figure of 5,000 with average monthly collection of about Rs4 billion without any field staff including inspectors, superintendents or deputy superintendents.
They said that keeping in view of great performance of the Authority, working with Iftikhar Qutab in the chair, the Punjab government has decided to merge all tax collecting agencies of the province with the PRA, which has shown significant revenue collection within very short span of time.
According to Finance Department officials, federal government has never remained empowered to levy the sales tax on services. However, from 1971 onwards, different services were subjected to traditional Federal Excise duties. But the international development partners continued to persuade Pakistan to introduce VAT-type sales tax on services. Provinces were therefore, asked in 2000 to introduce their service tax legislations and entrust FBR to collect and administer provincia1 sales tax on services. Excise duties were however, kept intact on services included in the list of Federal subjects (e.g. communication). Nevertheless, the 18th Constitutional Amendment changed the whole landscape of national fiscalism in Pakistan. Now the Federation is not empowered to levy taxes on services.
In Pakistan, provinces were determined to manage the collection of sales tax on services on their on level. In this regard, Sindh pioneered and Punjab took the second lead.
Through an independent legislation, Punjab established a semi-autonomous organisation, Punjab Revenue Authority (PRA) to collect and enforce sales tax on services. It also enacted the Punjab Sales Tax on Services Act, 2012 in supercession of the Punjab Sales Tax Ordinance, 2000.
To begin with, Punjab kept the tax coverage only to the fourteen categories of services covered under the repea1ed ordinance, viz, hotels, telecommunication, clubs, insurance and reinsurance, caterers, banking companies, advertisements on TV & radio, non-banking financial institutions (including Cable TV), stock brokers, Customs agents, shipping agents, ship chandlers, courier services and stevedores.  Officials said that scope of sales tax on services being progressively expanded with the passage of time after examining the multi-disciplinary viabilities of new tax obligations. As of today, the scope of Punjab’s sales tax on services is less wider than it’s counterpart in Sindh, they added.