In a major break from the past, the Punjab government has adopted an aggressive resource mobilization strategy for next financial year. Revenue mobilization measures proposed in the budget include proposal for revision in the rates of land based Agricultural Income Tax (AIT). The rates were last set in 2001. In the income mode of AIT, the exemption threshold has been proposed to be raised from Rs 80,000 to Rs 400,000 to bring in greater horizontal equity in our taxation system vis-à-vis taxation of non-agricultural income.
Revenue mobilization proposals pertaining to Urban Immovable Property Tax include: 1) extension of rating areas to bring commercial and residential properties along highways/main roads into the tax net; 2) expansion of rating areas to align actual city boundaries with existing rating areas; and 3) fresh survey of properties in Punjab as well as update of valuation tables. More services are being proposed to be brought to the net of sales tax on services.
The government is actively considering shifting from a positive list of taxable services in GST on Services Act 2012 to a system of negative list that will tax all services except those explicitly exempted by the law. This reform will, however, be finalized during the next financial year. In order to increase fiscal space available for service delivery initiatives, another priority area for the new government has been the rationalization of untargeted subsidies. Similarly, a number of user fees have been proposed to be rationalized to generate more resources for the government. Altogether the resource mobilization efforts are estimated to result in generation of additional resources worth Rs 24.9 billion in FY2019-20.
In order to enhance the business environment to make it more accessible for mass public, Government of the Punjab has embarked upon the agenda of implementing Ease of Doing Business Reforms to improve the sub-national ranking of key Doing Business indicators that fall in the provincial domain. The Planning & Development (P&D) Department, in collaboration with the World Bank and multiple implementing agencies, has initiated targeted interventions, envisaged under the Ease of Doing Business Reform Agenda to enhance the Provincial business landscape. A key area of the Doing Business Reform is the ease of paying taxes.
The Punjab government has also taken lead on the agenda and signed a Tri-partite agreement with the State Bank of Pakistan and 1-Link to launch a system of electronic payment of taxes and non-tax receipts through online as well as alternative delivery channels (ADCs) such as ATMs, Mobile Banking etc. Under this agreement both electronic and physical mediums in 27 commercial banks across Pakistan can be utilized by taxpayers to initiate a transaction under the bill payment system (BPS).