Property and professional taxes: Punjab sets recovery target

The Punjab government has set an ambitious target of Rs 5,905 million for the recovery of Urban Immovable Property Tax (UIPT) in the financial year 2012-13. Official sources told Business Recorder that the government intended to achieve this target through improving its revenue collection efficiency and reducing leakages in tax collection.

According to them, UIPT is essentially a devolved tax but for administrative convenience, it is being collected by the provincial government and passed on to the Tehsil Municipal Administrations (TMAs).

Sources claimed that the provincial government already intended to implement a number of reform measures to enhance the revenue potential of the UIPT during FY 2010-11. These measures included upgradation of valuation tables and reduction in differential between owner occupied and rented properties. Revised Estimates 2011-12 of UIPT is Rs 4,300 million which is compared to collection of Rs 3,220.969 million in FY 2010-11. In this way, the Revised Estimates 2011-12 is 33.5 percent higher compared to actual collection in previous financial year. Nevertheless, this impressive growth rate has been achieved through increase in tax based by better administration and improved recovery of arrears.

Moreover, the provincial government has set a target of Rs 886.500 million for the recovery of Professional Tax in the year 2012-13.

As per Budget Estimates 2012-13 of Professional Tax, which is of Rs 886.5 million compared to RE 2011-12 of Rs 448.358 million, the government is targeting 97 percent growth in professional tax compared to the collection in FY 2011-12.

Source claimed that Excise & Taxation Department has prepared a plan to achieve this ambitious target by plugging gaps in professional tax law due to which a large number of companies legally avoid this tax.

Sources claimed that contribution of Professional Tax is not huge but it is an important tax due to being a direct tax having a potential for buoyancy in the long term.

On the other hand, some experts recommend merger of professional tax into Sales Tax on Services with a view to reduce number of taxes levied by the government.