Tax measures seek to target affluent class

The Punjab Finance Bill 2011-12 tabled before the provincial assembly on Friday proposed to impose tax on the Punjab's affluent class to generate more revenue by levying tax on farm houses, education cess on elite clubs, duty on special classes of entertainments, and increase in the rate of token tax on motor vehicles exceeding 1000cc.
On the relief side, the Bill proposed to decrease the rate of General Sales Tax (GST) from 17 percent to 16 (which is in line with the decision of the Federal government) and entertainment duty from 65-percent to 25-percent. The Bill, tabled by Finance Minister Kamran Michael, states that that in order to make entertainment affordable to the common man, Entertainment Duty is proposed to be reduced. Similarly, GST on services is also proposed to be reduced. Combination of these steps would provide relief to the masses, it claimed.
Meanwhile, the main focus of the Bill is on taxing the Punjab's affluent class with the aim of generating more revenue. Proposing to levy farm house tax, the Bill states that there are palatial farm houses constructed by affluent persons outside the urban rating areas. Presently, no Property Tax is being charged from the owners of these farm houses. It is proposed to levy a fixed Farm House Tax on three categories of farm houses (constructed after 1980) having a minimum area of 4 kanals with minimum covered area of 5000 square feet. It proposes to recover the tax from the owner or occupant of a farm house at the following rate: Rs 10 per square foot of the covered area per annum on a farm house with covered area between 5000 to 7000 square feet; Rs 15 per square foot on a covered area between 7001 to 10,000 square feet; and Rs 20 per square foot on a covered area of more than 10,000 square feet.
The Bill also states that there are many elite clubs rendering services to affluent sections of the society. The members of these clubs have the capacity to pay Cess for purposes of provision of education to poor and needy children. Thus, under this rationale, the government proposes to levy Education Cess on clubs, under which 10 percent Cess would be levied on both initial membership fee and services rendered by these clubs.
It also intends to enhance the rate of token tax for private vehicles. The Bill states that the rate of Token Tax was last revised in 2004, and since then the tax has lost its real value due to inflation. Therefore, it is proposed to rationalise its rates with engine capacity higher than 1000 cc. Thus, token tax on a 1000-1300 cc vehicle will be enhanced from Rs 1200 to Rs 1800 per annum, 1300-1500 cc from Rs 1800 to Rs 3000, 1500-2000 cc from Rs 3000 to Rs 4500, 2000-2500 cc from Rs 4500 to Rs 6000 and 2500 cc and above Rs 6000 to Rs 10,000. Moreover, a three-door 4x4 vehicle with engine power exceeding 2500 cc will be charged Rs 4500 per annum. Token tax on a vehicle with engine capacity not exceeding 1000c and a vehicle with seating capacity of not more than three persons will remain at Rs 600 and Rs 500, respectively.
The government also proposed to levy duty on special classes of entertainments, such as horse racing, circus, fashion shows and musical shows. The rate of duty for admission to horse racing will be 200 percent of the payment for admission or Rs 200 per admission ticket, whichever is higher. On circus, the rate of duty will be 20 percent of the payment for admission; provided that the government may, by notification, require the proprietor of the circus to pay the duty on annual fixation basis, on such terms and conditions as the government may determine. On fashion show or musical show, the rate of duty will be 65 percent of the payment for admission or 65 percent of the total amount paid to the owner or management of the premises or total expenditure made by organiser or sponsor, whichever is higher.
The Bill also proposes Water Conservancy Charge on swimming pools at the rate of Rs 60,000 per annum from the owner or occupant of a house or any other building, except an educational institution, having a swimming pool with a minimum surface area of 250 square feet. The government believes that this step would help in conserving water in the province.