KP govt proposes halving property tax, 400% hike in tobacco cess

PESHAWAR: The Khyber Pakhtunkhwa government has decided to propose to the federal government to halve the provincial share of property tax and reduce the tax on property purchases of up to Rs. 10 millions.

The provincial government has started considering increasing the tobacco cess by up to 400%, which is expected to generate revenue of more than Rs. 2 billion annually for the province.

Advisor to the Chief Minister on Finance, Muzammil Aslam, told the media that the property tax in Khyber Pakhtunkhwa is currently 23%, with the provincial share being only 6%. The federal government collects the remaining tax. The proposal is to reduce the provincial tax to 3% from 6%. The federal government will also be recommended to review its policy and reduce this tax. The federal government currently charges 6.5% tax from tax filers, while there is a 10% increase in tax for non-filers. These conditions are the same for properties ranging from a few lakhs to billions of rupees.

Aslam further said that the federal government will be recommended to relax the tax conditions for properties up to Rs. 10 million so that a poor citizen can buy a house for himself.

Earlier, a meeting was held under the chairmanship of Advisor to the Chief Minister on Finance, Muzammil Aslam, to discuss the tobacco development cess. The meeting was attended by Provincial Minister for Irrigation, Aqibullah Khan, Director General Excise Akmal Khatak, and a representative delegation of tobacco growers.

The meeting approved a proposal to increase the tobacco development cess by Rs. 50 per kg for Virginia, Rs. 30 per kg for white leaf, rustica tobacco, and Rs. 20 per kg for niswar tobacco.

The meeting was also informed that the tobacco development cess is not equal to the actual price of tobacco, and various proposals are under consideration to increase it.

During a meeting with a representative delegation of growers from Swabi, Advisor to the Chief Minister on Finance, Aslam, said that the provincial government is also preparing an action plan for tobacco exports so that better income can be obtained by exporting tobacco.

Provincial Minister for Irrigation, Aqibullah Khan, said that the tobacco development cess is being spent on the development of the relevant area, and the more cess funds the area receives, the more development work will be possible in the relevant areas.

Impact on Farmers

The meeting informed the growers that in case of damage or destruction of tobacco, a cess of 10% or less will be paid if no such incident is reported in the first three months. If the fund is not sent in any way, it will be sent to other development sectors and will be used for sports or recreational activities for the youth in tobacco-producing areas. It can also be used to provide clean drinking water.

The provincial government currently earns about Rs. 500mn annually from the tax levied on tobacco. With the said increase, the revenue from tobacco cess will increase to more than Rs. 2 billion.

Aziz Buneri
Aziz Buneri
Author is a senior journalist and working in the field of journalism since 2004. He covers Financial, Social, Political and regional issues for Pakistan today and Profit. He can reached at [email protected]

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