LAHORE: In what appears to be an attempt reduce provincial tax collection deficit and widen revenue base, the Punjab Revenue Authority has identified nearly 24,850 new service sector businesses to bring them in the Punjab sales tax net in current fiscal year 2015-16.

An official document available with Dawn reveals that the authority plans to register newly identified businesses to shift from direct taxes to indirect taxes claiming such taxes are less harmful to growth.

The identification of new potential businesses as of May 2015 has been made by using multiple source and field surveys.

The document further says so far the authority has registered/e-enrolled 8,440 persons and compulsorily registered 1,994 others, raising total registered population to 10,434 as of April 2015.

Plan to shift from direct to indirect taxation

The authority has taken measures for broadening tax base by gathering business data from the Punjab Excise & Taxation department, food businesses, the Punjab Food Authority and lists from trade and professional associations, business advertisements in print and electronic media and office of the Directorate of Industries, Punjab.

The PRA during first 11 months of 2014-15 has made 3,565 new enrollments with breakup of 557 in July 2014, 407 in August, 314 in September, 511 in October, 617 in November, 204 in December, 242 in January 2015, 178 in February, 239 in March and 296 in April this year.

The data shows that the graph of new enrollments came down from November 2014 to April 2015, showing a decrease of 48 per cent.

On the one hand, the Punjab government is going to promote indirect taxes by empowering PRA, but on the other the entire business community has rejected the indirect taxes with the argument that indirect levies will burden each segment of society. They say the government should plug in loopholes in collection of direct taxes.

The provincial government claims its provincial tax collection has improved from 0.4pc of GDP in 2011-12 to 0.7pc in 2013-14 which it says is still low despite enhanced fiscal empowerment after the 18th Constitutional Amendment.

Published in Dawn, July 7th, 2015

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