Govt mulling imposition of one-time property tax

ISLAMABAD Besides flood tax and import duty, the Federal Government is seriously contemplating to impose one-time tax on property to generate additional revenue, as it needs revenue for rehabilitation and reconstruction of the flood-hit areas. Well-placed sources in PPP informed TheNation on Tuesday that proposal of imposing tax on property came under consideration in PPP Parliamentary Committee meeting held on Monday evening. Sources told that PPP leaders were of the view that through this move, a handsome amount of revenue could be collected. The meeting was co-chaired by President Asif Ali Zardari, who is also the Co-Chairman of PPP, and Prime Minister Syed Yousuf Raza Gilani. Sources have further told that property tax would be imposed on those houses whose values go beyond Rs 20 to Rs 40 million. However this would be one-time tax. It is worth mentioning here that earlier President Asif Ali Zardari gave a suggestion to impose property tax in the Federal Capital and Sindh province only, however, according to the analysts and economic experts, this could not make any sense as it shows discrimination. However this time, PPP leaders want to impose property tax throughout the country. Meanwhile, the Government is also considering to impose two percent flood tax on all imports to generate additional revenue. And this will be in addition to 5 to 10 percent flood surcharge/tax on all incomes exceeding Rs 300,000 per annum, including salaries and profits, not only for individuals but also for associations of persons, companies, businesses and traders. The Government is considering collecting Rs 50 to Rs 60 billion through flood tax, sources added. According to sources, due to these moves, the Government would be able to bridge the gap of revenue shortfall. The Government would also revise its annual revenue collection target for the ongoing fiscal year 2010-11 from Rs 1,667 billion to some higher level. However the new tax collection target would be finalised in the next few days. APP adds: Minister for Finance Dr Abdul Hafeez Shaikh said on Tuesday that the Government was not considering to levy 10 percent additional flood tax on income. Addressing a ceremony organised to pay refund cheques of taxpayers, the Minister said the Government would go for other options to generate funds. Even if the flood tax is imposed, it would be nominal and would not put additional burden on the tax payers, he added. He said the Government was determined to bring reforms in the current tax system. The Minister said that flood surcharge would not be imposed on income, sales tax, import and export but it would be charged on property, land and higher income group who can bear the burden. Reformed General Sales Tax (RGST) would be imposed after the complete consensus of the provinces through proper legislation and approval of the parliament which aims to bring more sectors into tax net by abolishing the tax exemptions, he added. Dr Shaikh said that the federal and provincial representatives were progressing towards final decisions on RGST and all the matters would be finalised during the next few days. He said that Government had decided to keep the RGST ratio at 15 percent. However, due to economic situation after the flash floods in the country some changing are expected. Reforms in tax system, he said, are aimed at to increase the tax to GDP ratio as promised with international institutions as well as to bring transparency in the existing system. No additional burden would be put on the people who are already paying the tax, he said and added that honest tax payers would be encouraged.

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