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Punjab to tax rich and their posh lifestyle

ISLAMABAD: The Punjab government will significantly tax posh facilities used by the elite like private swimming pools, large farmhouses, private medical colleges, multi-source income shown as proceeds from agriculture land holdings and sprawling houses in expensive localities.

“The purpose is to tax the rich. The move is part of efforts to generate own resources in order to lessen dependence on foreign grants and loans,” a senior official told The News. Punjab Chief Minister Shahbaz Sharif recently announced to smash the begging bowl and mobilize indigenous resources to meet the pressing financial requirements.

Farmhouses measuring 2400 square yards (four kanals) and above will be required to pay a certain amount of annual tax. The official said farmhouses having the covered area of 5,000 square feet and above and having different sizes would be categorized for the purposes of levying various amounts of tax.

Only those farmhouses would be taxable, which are located outside the “rating areas” meaning the previously demarcated municipal limits. The official said that even in villages, rich people have made big houses, which would fall in the definition of farmhouses and would face the new tax. The tax would be computed on per square foot.

He said that a number of wealthy people have made swimming pools in their houses mostly in basements in Lahore and some other cities, but were paying no tax whatsoever. While in many countries tube wells are not allowed to be erected, these pools get water from such sources, the official said.

He said that as scores of private medical colleges in Punjab were charging exorbitant fees from students, they were not paying taxes. They have to be brought in the tax net so that they also make contribution to national resources.

According to one estimate, there are some 3,000 students studying in the private medical colleges in Punjab alone. They charge heavy fees starting with the minimum of half a million rupees per annum and going up to one million.

Another category being brought in the tax net consists of those who have multi-sources income, which is clubbed with earnings from agriculture land. These people own factories and other businesses but show their income from them as coming from agriculture just to get tax exemption. This income would be levied agriculture tax, which is a provincial subject.

They generally show their factories and businesses running into losses and whatever they earn from them, they declare as income from agriculture for exemption. The official said that tax on expansive houses in posh localities like Gulberg and Model Town and such areas in other cities, mostly described as A category residences, would be considerably enhanced.

“The whole effort is to tax a certain lifestyle because if you are rich, earn a lot from different sources and spend generously on the facilities you are enjoying, you have to pay the due tax,” the official said.

He said that homework on these proposals has been concluded, and the new taxes would be included in the next budget to be presented in a few weeks time. Billions would come in the coffers of the cash-starved Punjab government through such measures, he said and believed that still there were many areas, which were untaxed.

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