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1 Introduction:- An excise or excise tax is an indirect or inland tax on the sale, or production for sale, of specific goodsor a tax on goods produced for sale, or sold, within a country or licenses for specific activities. Excisesare 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 theproducer or seller who pays the tax to the government is expected to try to recover or shift the taxby raising the price paid by the buyer. Excises are typically imposed in addition to another indirecttax 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) an excise typically applies to a narrower range of products;(ii) an excise is typically heavier, accounting for a higher fraction of the retail price of thetargeted products; and(iii) an excise is typically a per unit tax, costing a specific amount for a volume or unit of theitem purchased, whereas a sales tax or VAT is an ad valorem tax and proportional to theprice of the good.The word excise is derived from the Dutch accijns, which is presumed to come from the Latinaccensare, meaning simply to tax . Regulatory and legal definitions of 'excise' vary by country. Forexample:1. In India, an excise is described as an indirect tax levied and collected on the goodsmanufactured 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. Someof 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 goodsproduced or manufactured in Australia. These... include alcohol, tobacco and petroleum andalternative 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) goods produced or manufactured in Pakistan; (b) goods imported into Pakistan; (c) such goods as the Federal Government may, by notification in the officialGazette, specify, as are produced or manufactured in the non-tariff areasand are brought to the tariff areas for sale or consumption therein; and(d) Services provided in Pakistan including the services srcinated outside butrendered in Pakistan; Rationale In defense of excises on strong drink, Adam Smith wrote: It has for some time past been the policyof Great Britain to discourage the consumption of spirituous liquors, on account of their supposedtendency to ruin the health and to corrupt the morals of the common people. Samuel Johnson wasless flattering in his 1755 dictionary: EXCI'SE. n.s. ... A hateful tax levied upon commodities, and 2adjudged not by the common judges of property, but wretches hired by those to whom excise ispaid. Monies raised through excise are often earmarked for redress of specific social costs commonlyassociated with the product or service being taxed. Tobacco tax revenues, for example, might bespent on government anti-smoking campaigns.Excise duties or taxes often serve political as well as financial ends. Public safety and health, publicmorals, environmental protection, and national defense are all rationales for the imposition of anexcise. Public safety and health o deter individuals from harming their health by abusing substances such as tobaccoand alcohol, thus making excise a kind of sumptuary tax, or o deter them from engaging in morally objectionable activities such as gambling andprostitution (including solicitation and pimping) – thus making it a type of vice tax orsin tax Environmental protection o deter individuals or organizations from harming the general environment, includingcurbing activities which contribute to pollution, or which harm the naturalenvironment. 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 imposesexcise on money laundering and on visiting forces (which can be construed tomean occupying military forces). These taxes are not considered revenue sources,but rather exist to allow gove rnment’s greater leverage for punishments andreparations/war reparations – based around the concept of tax evasion – which canbe 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 Sindhwhich plays a paramount role in resource mobilization. The Department has been entrusted withtwo 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 TaxationDepartment and the taxpayers in these categories are more than 5 million.i) Property Taxii) Professional Taxiii) Infra-Cess Taxiv) Motor Registration Fee and Taxv) Hotel Taxvi) Excise Dutyvii) Cotton Feeviii) Entertainment Duty 3 Property Tax:- The levy and collection of property tax on lands and buildings is regulated by the Sindh UrbanImmovable 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 andbuildings declared as Rating Areas by the government. Property Tax is one of the major taxescollected by the Department. Professional Tax:- Professional tax, also known as an occupation tax or a professional privilege tax, is a tax that aprofessional must pay to receive the right to practice a professional service. Professional Tax regimeproduces manually prepared tax challans for business entities, on annual basis. Criteria forcalculating professional tax are fixed, depending upon number of directors, employees and Paid-UpCapital and Annual turnover of Establishment. It is believed that there is a gap between the assessesas per the record Department and that of the Income Tax Department. This gap of assesses can beimproved, once the computerization of Professional Tax takes place and database of Income taxassesses belonging to business and trade is obtained. Notices to professional tax assesses can beissued / 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 theCustoms Department. . . Motor Registration Fee and Tax:- Vehicle Registration involves the recording of a motor vehicle in the official records after dueverification. Vehicle Registration is mandatory/compulsory under the law and is essential to provethe ownership of a vehicle. It is also required during the sale of a vehicle and transfer of itsownership. At present there are approximately 2.6 million registered vehicles in Sindh and thenumber is increasing day by day.i. Motor Vehicle Tax is levied on every motor vehicle registered in any district withRegistration Fee.ii. The annual Motor Vehicle Tax is levied under Sindh Motor Vehicle Taxation Act,1958 andMotor 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 beingaffected through computerized system and authorized online National Bank branches linked withmain server at Civic Centre Karachi.The Computer System of Civic Centre Karachi is also linked with the regional Directorates, Exciseand 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 everyyear .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 hotelan 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 4are manually prepared by Excise and Taxation Officer, and payment is made generally throughcrossed cheque into State Bank of Pakistan Excise Duty:- The Excise and Taxation Department controls the manufacturing and sale of following excisablearticles:-Intoxicating liquor (PMFL and Beer)1. Rectified Spirit.2. Denatured Spirit.3. Methanol.The Excise matters are dealt under the following enactments:a) Prohibition (Enforcement of Hold) ordinance 1979.b) Sindh Prohibition Rule 1975c) The Sindh Abkari act 1879.d) 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 GinningFactory. 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 VarietyProgrammes Sports etc on following rates.1. Presently no duty is being collected from Cinemas.2. Dramas, plays, variety Programmes 10% of the payment for admission.3. Games and Sports 5% of the payment for admission.4. Items of amusement other than above 25% of the payment for admission. Aims:- The Excise & Taxation Department provides services for collection of various taxes and dutiesefficiently and effectively and suggests ways and means for additional resource mobilization in theProvince. Apart from building up of taxpayer’s confidence, creation of taxpaying culture and providing facilitiesto the general public in payment of taxes are the top most priorities, the department aims to: 1. Mobilize fiscal resources through equitable and taxpayer-friendly taxation and customerfacilitation, 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 official’s interface.
