Punjab imposes new taxes on the rich

Punjab government imposed new taxes in the budget 2011-12 by imposing tax on farm houses, elite clubs, swimming pools, duty on special classes of entertainments and enhancing rate of token tax of vehicles with engine capacity of 1,000cc or more.
Provincial Minister Kamran Michael in the Finance Bill said that the government also 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 20 percent.

The bill tabled by Finance Minister Kamran Michael states that in order to make entertainment affordable for the common man, Entertainment Duty is proposed to be reduced. Similarly, GST on services is also proposed to be reduced. Meanwhile, the bulk of the Bill is focused on taxing the Punjab’s affluent class with the aim of generating more revenue.

The rate of token tax was revised in 2004 but now once again it was revised and it is proposed to rationalise it with the current value due to inflation. The government proposes to levy Farm House Tax on which 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 minimum area of 4 kanals and with minimum covered area of 5,000 square feet. Hence, it is proposed to recover the tax from the owner or occupant of a farm house at the following rate:

The bill also states that there are many elite clubs rendering services to affluent sections of the society. The members of these clubs have capacity to levy cess for provision of education to 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.

The Bill proposed to rationalise its rates with engine capacity higher than 1000 CC.
Token tax of a 1,000-1,300 cc vehicle will be enhanced from Rs1200 to Rs1,800 per annum; 1,300-1,500cc Rs1,800 to Rs3,000; 1,500-2,000 cc Rs3,000 to Rs 4,500, 2,000-2,500 cc Rs4,500 to Rs6,000 and 2,500 cc and above Rs6,000 to Rs10,000. Moreover, a three-door 4×4 vehicle with engine power exceeding 2500 cc will charged Rs 4,500 per annum. Token tax on a vehicle with engine capacity not exceeding 1,000c and vehicle with seating capacity of not more than three persons will remain at Rs600 and Rs500, respectively.

The government also proposes 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 Rs200 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 organizer or sponsor, whichever is higher.

The bill also proposes water conservancy charge on swimming pools at the rate of Rs60,000 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.