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Introduction:An excise or excise tax is an indirect or inland tax on the sale, or production for sale, of specific goods or a tax

on goods produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes. An excise is considered an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover or shift the tax by raising the price paid by the buyer. Excises are typically imposed in addition to another indirect tax such as a sales tax or value added tax (VAT). In common terminology, an excise is distinguished from a sales tax or VAT in three ways: (i) (ii) (iii) an excise typically applies to a narrower range of products; an excise is typically heavier, accounting for a higher fraction of the retail price of the targeted products; and an excise is typically a per unit tax, costing a specific amount for a volume or unit of the item purchased, whereas a sales tax or VAT is an ad valorem tax and proportional to the price of the good.

The word excise is derived from the Dutch accijns, which is presumed to come from the Latin accensare, meaning simply "to tax". Regulatory and legal definitions of 'excise' vary by country. For example: 1. In India, an excise is described as an indirect tax levied and collected on the goods manufactured in India. 2. In the United Kingdom, HM Revenue and Customs lists "alcohol, environmental taxes, gambling, holdings & movements, hydrocarbon oil, money laundering, refunds of duty, revenue trader's records, tobacco duty, and visiting forces" as being subject to excise. Some of the listed items are not goods, but rather services. 3. The Australian Taxation Office describes an excise as "a tax levied on certain types of goods produced or manufactured in Australia. These... include alcohol, tobacco and petroleum and alternative fuels". 4. In Pakistan, Subject to the provisions of the Federal Excise Act and rules made there under, there shall be levied and collected in such manner as may be prescribed duties of excise on, (a) (b) (c) goods produced or manufactured in Pakistan; goods imported into Pakistan; such goods as the Federal Government may, by notification in the official Gazette, specify, as are produced or manufactured in the non-tariff areas and are brought to the tariff areas for sale or consumption therein; and Services provided in Pakistan including the services originated outside but rendered in Pakistan;


Rationale In defense of excises on strong drink, Adam Smith wrote: "It has for some time past been the policy of Great Britain to discourage the consumption of spirituous liquors, on account of their supposed tendency to ruin the health and to corrupt the morals of the common people." Samuel Johnson was less flattering in his 1755 dictionary: "EXCI'SE. n.s. ... A hateful tax levied upon commodities, and

adjudged not by the common judges of property, but wretches hired by those to whom excise is paid." Monies raised through excise are often earmarked for redress of specific social costs commonly associated with the product or service being taxed. Tobacco tax revenues, for example, might be spent on government anti-smoking campaigns. Excise duties or taxes often serve political as well as financial ends. Public safety and health, public morals, environmental protection, and national defense are all rationales for the imposition of an excise.

Public safety and health o deter individuals from harming their health by abusing substances such as tobacco and alcohol, thus making excise a kind of sumptuary tax, or o deter them from engaging in morally objectionable activities such as gambling and prostitution (including solicitation and pimping) thus making it a type of vice tax or sin tax Environmental protection o deter individuals or organizations from harming the general environment, including curbing activities which contribute to pollution, or which harm the natural environment. Defense o including taxation directly levied on other countries' militaries and/or governments, such as the UK's taxation on "visiting forces" Punitive o Many US states impose taxes on illegal drugs while the UK government imposes excise on money laundering and on "visiting forces" (which can be construed to mean occupying military forces). These taxes are not considered revenue sources, but rather exist to allow governments greater leverage for punishments and reparations/war reparations based around the concept of tax evasion which can be imposed in the event that the perpetrator is caught and tried.

Practical Implementation:Excise and Taxation Department, Government of Sindh The Excise & Taxation Department is the main revenue collecting agency of the Government of Sindh which plays a paramount role in resource mobilization. The Department has been entrusted with two functions i.e. Tax collection and Narcotics suppression. It has the exclusive authority of issuance & administering the intoxicating liquor and other intoxicating licenses. In the province of Sindh following Taxes are being levied and collected through Excise and Taxation Department and the taxpayers in these categories are more than 5 million. i) ii) iii) iv) v) vi) vii) viii) Property Tax Professional Tax Infra-Cess Tax Motor Registration Fee and Tax Hotel Tax Excise Duty Cotton Fee Entertainment Duty 2

Property Tax:The levy and collection of property tax on lands and buildings is regulated by the Sindh Urban Immovable Property Tax Act 1958. Section 7 of the Act mandates preparation of valuation list of properties for the purpose of property tax after every five years. Property Tax is levied on lands and buildings declared as Rating Areas by the government. Property Tax is one of the major taxes collected by the Department. Professional Tax:Professional tax, also known as an occupation tax or a professional privilege tax, is a tax that a professional must pay to receive the right to practice a professional service. Professional Tax regime produces manually prepared tax challans for business entities, on annual basis. Criteria for calculating professional tax are fixed, depending upon number of directors, employees and Paid-Up Capital and Annual turnover of Establishment. It is believed that there is a gap between the assesses as per the record Department and that of the Income Tax Department. This gap of assesses can be improved, once the computerization of Professional Tax takes place and database of Income tax assesses belonging to business and trade is obtained. Notices to professional tax assesses can be issued / produced by the system automatically. As a sequel to this, tax base will be broadened. Infrastructure Cess:Infrastructure Cess tax regime is applicable to all the goods entering the Province through Sea or Air. A Cess @ 0.85% (@0.125% of Gold only) is levied on the C and F value of goods as determine by the Customs Department. . . Motor Registration Fee and Tax:Vehicle Registration involves the recording of a motor vehicle in the official records after due verification. Vehicle Registration is mandatory/compulsory under the law and is essential to prove the ownership of a vehicle. It is also required during the sale of a vehicle and transfer of its ownership. At present there are approximately 2.6 million registered vehicles in Sindh and the number is increasing day by day. i. ii. Motor Vehicle Tax is levied on every motor vehicle registered in any district with Registration Fee. The annual Motor Vehicle Tax is levied under Sindh Motor Vehicle Taxation Act,1958 and Motor Vehicle Rules, 1959.

Every vehicle whether commercial or private has to registered, and issued registration number, registration book and number plate. The registration of vehicles and collection of taxes are being affected through computerized system and authorized online National Bank branches linked with main server at Civic Centre Karachi. The Computer System of Civic Centre Karachi is also linked with the regional Directorates, Excise and Taxation at Hyderabad/Sukkur /Larkana /Mirpurkhas. Hotel Tax:Every hotel owner is required to furnish the particulars of his Hotel on Declaration Form H.T-1 every year .Assessment for Hotel Tax is made during every financial year on the basis of return / documents filed, inspection carried by the field staff and after giving the representative of the hotel an opportunity of being heard. Assessment order is issued and demand is raised in demand register. (HT-II ). Total annual liability of Hotel Tax is collected in (12) equal monthly installments. Tax challans 3

are manually prepared by Excise and Taxation Officer, and payment is made generally through crossed cheque into State Bank of Pakistan Excise Duty:The Excise and Taxation Department controls the manufacturing and sale of following excisable articles:Intoxicating liquor (PMFL and Beer) 1. Rectified Spirit. 2. Denatured Spirit. 3. Methanol. The Excise matters are dealt under the following enactments: a) b) c) d) Prohibition (Enforcement of Hold) ordinance 1979. Sindh Prohibition Rule 1975 The Sindh Abkari act 1879. Sindh Excise Manual Volume-I.

Cotton Fee:Cotton Fee is levied under the Cotton Control Ordinance 1968. The base of the Cotton Fee is the quantity of Raw Cotton brought for ginning in the Cotton Ginning Factory. The rate of Cotton Fee is Rs. 10/= per 100 K.G. of Raw Cotton. Entertainment Duty:Entertainment Duty is levied and Collected under Sindh Entertainment Duty Act, 1958. Entertainment Duty is levied on entertainment places like Cinemas, Amusements, Parks, and Variety Programmes Sports etc on following rates. 1. 2. 3. 4. Aims:The Excise & Taxation Department provides services for collection of various taxes and duties efficiently and effectively and suggests ways and means for additional resource mobilization in the Province. Apart from building up of taxpayers confidence, creation of taxpaying culture and providing facilities to the general public in payment of taxes are the top most priorities, the department aims to: Mobilize fiscal resources through equitable and taxpayer-friendly taxation and customer facilitation, plug in leakages, expand tax base, and rationalize tax rates and exemptions, BPR. 2. Promote automation and outsourcing of functions & services to ensure IEE, economize and optimize delivery of public services through minimum public and government officials interface.

Presently no duty is being collected from Cinemas. Dramas, plays, variety Programmes 10% of the payment for admission. Games and Sports 5% of the payment for admission. Items of amusement other than above 25% of the payment for admission.

3. 4. 5. 6. 7. 8. 9. 10.

Transform HR into professionally sound, motivated team, committed to dispense public friendly services and be a semblance of good governance. Maximize fiscal space Create tax-paying culture Improve service delivery Build public trust Improve departmental image HR at the central stage of the reform initiatives Motivate & provide enabling environments to E&T Human Resource

Services:The Excise & Taxation Department of the Government of the Sindh provides the following services:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Collection of Provincial Taxes as assigned by the Government. Collection of Capital Value Tax and Advance Income Tax on behalf of Federal Government at the time of registration of a vehicle and collection of Motor Vehicle Tax respectively. Issuance of Registration Marks and Certificates to Motor vehicles. Collection of Token Tax from the owners of Tied-Up Vehicles through Bank. Collection of Token Tax from the owners of Non Tied-Up Vehicles through Post Offices. Issuance of Duplicate Registration Certificates of the vehicles, Change of Ownership, Change of Engine Number and issuance of NOC etc. for the owners of the vehicles. Collection of Property Tax according to the assessment of Property Unit. Issuance of Assessment Copy of Property Unit on PT-1 Form. Issuance of Clearance Certificate in respect of Property Unit. Updating of records in respect of property units in respect of Change of Ownership, Self Occupied Property Unit, and Rented Property Unit etc. Enforcement of Hadd Ordinance, 1979 for prohibition of liquors, intoxicants and narcotics. Regulation of import, export, possession and consumption of various dangerous drugs and narcotic substances. Issuance of different Permits/Licenses for possession and sale of liquors and spirits

Functions:The Excise and Taxation Department has been mandated the twin functions of TAX COLLECTION AND NARCOTICS SUPPRESSION. This department initially created in 1908, has been in the arena of tax collection and narcotics control in the province in various silhouettes/ structure but started functioning as an independent entity since 1971 after having disintegrated of one unit. This Department has incessantly been achieving the target of tax collection but has always exceeded them. This Departments contribution to provincial exchequer on taxation side comes to around 64% of total tax revenue receipts of the provincial Government and plays paramount important role in resource mobilization, trajectory of development and reforms programmers initiated by the Government from time to time. The prime goal of Department is to rationalize/simplify the system of collection of provincial taxes/levies/cess to provide all possible facilities to the taxpayers and to boost up the Government exchequer & to clamp down drug traffic/abuse, which is a pervasive and multifaceted curse and affects every aspect of not only the Pakistani society but the International community as well, which needs a well-coordinated, concerted and synergistic efforts on part of not only all the Government Agencies/Departments but also International Agencies/Donors including civil organizations/NGO. Achievements:5

Computer Schemes: The number of 6 computerized Branches of National Bank of Pakistan with online linkage with main computer of Motor Registration Wing, Karachi has been enhanced to Eleven (11).

The computerization of Motor Vehicle Tax has resulted in

1. Considerable enhancement in the recovery of Motor Vehicle Tax 2. Minimized chances of leakages 3. Availability of secure, comprehensive and reliable data bank of all registered vehicles which is especially helpful for law enforcing agencies in curbing and detecting the crimes.

Property Tax relief (s) has been given to widows, orphans, disabled, retired Government servants, owners of small flats upto 600 sq. ft and houses upto 120 sq. yd. Remission given to Cinema Industry over Entertainment Duty. Personalized Irregular and Fancy Number Plates have been banned. Revenue Collection: During the current fiscal year 2012 - 2013 (upto April 2013) the department has collected 23,580.800 million.

Detection of Narcotics & Excise Crime: 09 Kg Chars, 110 Liters Illicit Liquor, seized. 13 Cases of Narcotics Crime Registered. 14 persons arrested. Strengthening of Check Posts by providing vehicles and more staff.

Destruction of Siezed Narcotics: 09 Kg Chars, 110 Liters of Illicit Liquor whos cases were decided by the concerned Courts were destroyed during the year.

Motor Registration Wing:

Renovated the two floors of Motor Registration Wing, resultantly, more space is created, 20 new counters introduced with better facilities to the motoring public. Organization of Record Room with Scanning of Files. Online reconciliation of Motor Vehicle Tax with National Bank of Pakistan will be introduced shortly. A new Motor Registration Counter at Awami Markaz is functional for Registration of vehicles. Uniform / Standardized number plates for Rickshaw / Motorcycle and Scooter will be introduced from next financial year. Installation of New Hardware and Software at Karachi, Hyderabad, Sukkur, Larkana & Mirpurkhas. Additional counters for registration / Tax payment added at Larkana, Hyderabad &
Sukkur. 6


References: 1. 2. 3.