KP mulls abolishing motor-vehicle token tax

PESHAWAR: The Khyber Pakhtunkhwa government is mulling over doing away with the motor-vehicle token tax and wants the federal government to incorporate Rs30 paisa in the petrol levy on account of the same for subsequent distribution to the respective provinces from the Federal Divisible Pool.

The Finance Department has started working on the plan and it is going to take other provinces on board to take up the matter with the federal government.

The department is taking the drastic measure after it faced slump in the token tax component as about 60 percent of the vehicles plying in the province are registered in other provinces, particularly Islamabad in case of registration of cars and Lasbela in case of oil tankers, trailer trucks and other heavy vehicles, are not paying this tax.

Citing the reasons behind these registrations, an Excise and Taxation Officer (ETO), who wished not to be named, said on Tuesday that a car registered in Islamabad was commonly considered genuine having a good resale value. While about the registration of the heavy vehicles in Lasbela, he said, it is so because they (owners) had to pay lesser taxes in that district.

Sharing the data with The News, he said that over 3 million vehicles were plying in Khyber Pakhtunkhwa, but only 1.47 million of them are registered in the province.

The document showed that 1472879 vehicles registered here include, 957518 motorcycles and scooters, 73371 three wheelers, 166581 cars, 11593 jeeps, 55484 pickups, double-cabins and mini trucks, 49740 trackers, 14993 buses, 25827 mini-buses and wagons, 4796 AC-Coasters, 1861 motor cabs (taxis), 58265 trucks and truck trailers, 76 water tankers, 3551 oil tankers, 1193 tankers, 740 cranes, 1424 ambulances, 23314 delivery vans and vans, 1412 dumpers and 22020 others vehicles registered in some 25 districts of the province.

The Excise Department has been given Rs325 million registration fee target for current financial year 2018-19 and its six-month (July-December) target was Rs162.500 million. However, its recovery by the end of December stood at Rs134.970 million.

The token tax target was set at Rs900 million while for the first six months of the financial year was Rs450 million, but the department fell short of the target and collected Rs435.420 million during the period.

The department’s previous fiscal year target for both registration fee and token tax was Rs1.150 billion and its recovery remained Rs1119.888 million.

About the propensity of the owners to register their vehicles in Islamabad or elsewhere, but KP, the ETO said that it was more of a perception issue.

He said their service remained competitive. The quality and delivery time of their computerised number plats, he said, is better and they have more security features with fully embossed digits and permanent colour features.

He said, “We return the original file to owners whom we serve in state-of-the-art tax facilitation centres through the one-window facility.” He added that they would soon issue smartcard registration book to the vehicles.

About the missing of the target, he said that they missed it by a slight margin for a variety of reasons which also include the policy decision of the Punjab and Sindh Excise departments that refuse to accept token tax and transfer charges deposited with KP Excise, while KP Excise accepts these taxes deposited in others provinces.

Secretary Finance Department Shakeel Qadir Khan, while elaborating the contours of the plan, confirmed that they were mulling over the plan to cope with the traditional lagging of the Excise and Taxation Department in revenue collection.

“About motor vehicle registration tax we are coming up with a different concept, and we will take other provinces on board in this respect, but we are thinking to do away with this token or renewal registration tax which is a cumbersome thing,” he added.

The secretary said that token tax was actually the road levy the motorists pay to the government to maintain roads, but unfortunately, almost 60 percent of the vehicles using the province’s roads or owned by local residents were not registered here.

As only 40 percent of the owners pay it and 60 percent don’t. It shifts the burden onto to those 40 percent paying it, who also ultimately stop paying the tax. It is, therefore, we are going to do with this thing (token tax), Shakeel Qadir said.

Similarly, the non-custom paid (NCP) vehicles in Malakand and erstwhile tribal areas are also not paying these taxes, he said and added that “very few people pay these taxes and others are taking a free ride. That’s why we want this to be incorporated into the fuel so that every user pays the road tax.”