Punjab budget likely on May 2

LAHORE: The PML (N)-led Punjab government is likely to present last budget of its tenure on May 2, for consecutive 6th year with some new tax measures, including taxing the rent–a–car and ride hailing services (Uber) in the province while keeping the services provided by legal experts (lawyers), health experts in non-public sector, hospitals, clinics, maternity homes and medical centres out of tax net.

Initially, the government is considering introducing tax rate of 5 percent on the rent-a-car and ride hailing services mainly Uber to start with. The officials attended the resource mobilisation committee meeting for the fiscal year 2018-19 to discuss and finalise the revenue generation measures told The News that the government has focused on rationalising the existing taxation measures and avoid any new taxation being the last budget before the election. However, some taxation measures are crucial and unavoidable for the continuation of tax reforms agenda initiated by the Punjab government.

A large number of proposals of new revenue collection were presented by the tax collection departments of Punjab, including Punjab Revenue Authority (PRA), Punjab Excise and Taxation Department and Board of Revenue (BOR), Punjab. However, majority of the proposals were turned down by the ministers on the objection of the elected representatives of the province.

The MPAs and ministers believed that the people were already agitating against the earlier tax measures of the Punjab during the previous year budgets. Thus the new taxes would have adverse political effect on the party in the next general election.

According to the documents presented in the meeting, a copy of which is available with The News, the government has also been considering bringing the broadcasting services and advertisement, including classified ads in newspapers, magazines, journals and periodicals in the tax net which were earlier exempted from the taxes. The Punjab government has also decided to tax the insurance service providers, debt collection, rent collection and similar other recoveries, courier services, including any cash collection, services provided by an individual owner of a vehicle for carriage of goods. The government will also withdraw the reduce tax rate scheme of 5 percent for standalone marriage halls and caterers to increase it to actual rates.

The finance, industry and commerce ministers asked the PRA officials to take legal opinion to bring few of services in tax net, including parking services and others to avoid any legal battle in case these services will bring in the tax net.

Similarly, the meeting turned down all the proposals of the Excise and Taxation (E&T) department, except considering the two, rationalisation of tax on imported vehicles exceeding engine capacity 1300cc and revision of Cotton Fee rates. Both measures will generate almost additional revenue of Rs900 million during the next fiscal year. The E&T department presented proposals of almost Rs3.9 billion worth new revenue generation measures.

Furthermore, the proposal of Board of Revenue (BOR) of increasing the rates of the stamp duty charged in shape of adhesive st`amps was also considered to introduce in the forthcoming budget. This will generate almost Rs630 million for the provincial exchequer in the next fiscal year. The BOR has justified the proposal with argument that the rates of the stamp duty paid in the shape of adhesive stamps under the Court Fee Act 1870 and Stamp Act, 1899 have not been revised since 1973 and 1995-1996, respectively. So this will need to be revised now as continuation of the tax reforms agenda of the Punjab province. An official of the Punjab government said the tax proposals were underway. This is routine practice before budget and the government was focusing on the tax reforms while nothing was finalised yet, the official added.