Agriculture tax collected from all the provinces of the country is just Rs 268 million despite this fact that sitting MNAs, MPAs and senators and other big politicians of the country possess vast agricultural lands according to their declared assets but the contribution of agri-tax is nominal.
Punjab, the main agricultural province of the country, has contributed Rs 252 million under the head of agricultural tax while Sindh, NWFP and Balochistan Rs 6 million, Rs 10 million and nil respectively.
These figures are given in the quarterly report of "Summary of Consolidated Federal and Provincial Revenue, Budgetary Operations" published by Ministry of Finance.
It may be stated that the Central Board of Revenue (CBR) is analysing last three years data pertaining to agriculture income tax collected from provinces to figure out the estimated tax in case the CBR collects the levy on behalf of federal government from all the four provinces.
A study is underway to workout revenue impact in case the tax authorities are empowered to collect provincial agriculture income tax in the provinces on the basis of income from sale of agri-produce from fiscal 2007-2008. This would enable the government to generate handsome amount of funds in each province as compared to the marginal collection under this head.
The study mainly focuses on collection of tax on the basis of agriculture income instead of existing mechanism of land holding. Presently, the non-irrigated area up to 25 acres is exempted from income tax, whereas irrigated area up to 12.5 acres is exempted from the tax.
In the irrigated area, the land tax of Rs 150 per acre is applicable. In case of seven years old orchards, the rate of land tax is Rs 350 per acre per annum.
There is difference between the collections of tax on income basis as compared to the land basis formula. For example, the levy of provincial income tax is the same for orchards producing fruit once in a year and the other orchards producing seasonal fruits repeatedly in one year. There is undue benefit to certain persons and simultaneously loss for others depending on the type of land.
On the other hand, the mode of collection on the basis of income would definitely improve revenue collection from this head. The CBR report will be presented to the Advisor to the Prime Minister on Finance Dr Salman Shah for possible consideration in the next budget 2007-2008.
The budget will show if the pledges to tax by the landlords become a reality or a mere rhetoric of government officials as number of them would also come under this tax net. Total tax collected from July to December 2006 by the provincial government fiscal operations (2006-07) is Rs 17,005 million comprising property tax, excise duties, stamp duties, motor vehicles and others.
The break-up of these as given in the report is: property tax Rs 1,732 million, excise duties Rs 974 million, stamp duties Rs 4,663 million, motor vehicles tax Rs 3866 million and others Rs 5,770 million. It may be added that total revenue for six month collected is Rs 215.744 billion out of which Rs 170.152 billion is contributed by the provinces.