Govt loses billions in tax exemptions
Over Rs147 billion tax exemptions have been given to the mighty during this financial year.
Over Rs147 billion tax exemptions have been given to the mighty during this financial year, which are more than the new tax measures planned in the upcoming budget including the Value Added Tax.
According to the Economic Survey of Pakistan 2009-10 released on Friday, the government has given Rs147.2 billion tax exemptions during fiscal year 2009-10, which are 25 per cent more than last year’s tax concessions. In 2008-09, the exemptions were worth Rs119.7 billion.
In the next fiscal year starting July, the government is planning to impose new taxes worth Rs132 billion, of which Rs70 billion, which is almost equal to customs duty exemptions, will be generated by levying the controversial Value Added Tax.
The government plans to collect Rs45 billion by taking new income tax measures and the amount is almost equal to the current income tax exemptions.
Similarly, sales tax exemptions amounted to Rs27.4 billion and the government is going to take new measures pertaining to customs duty to generate Rs17 billion.
In this financial year, the tax exemptions are also even more than the conditional money that Pakistan will get from the US under the Kerry-Lugar Act. Under the Act, the US will give $7.5 billion in civilian aid over five years.
The Economic Survey shows that almost half of the exemptions were given only on account of customs duty. Most of these exemptions were extended on the import of machinery, equipment and apparatus by hi-tech industries.
On top of that, Rs5.2 billion worth of tax exemptions were given to exploration and production companies on the import of machinery and vehicles. For the import of raw material, Rs3.8 billion tax exemptions were given.
The Federal Board of Revenue, while defending the concessions, said some of these exemptions were due to international contractual obligations.
This fiscal year, income tax exemptions are 15 per cent more than the last financial year. Almost half of the amount was lost on account of capital gains tax exemption.
The second largest sector was the enterprises as about Rs20 billion could not be netted due to waiver from taxes on their income.
On sale of fertiliser and tractors, Rs8.8 billion and Rs6.3 billion tax exemptions respectively were given. Similarly, on the sale of pharmaceutical products, Rs3.8 billion tax exemptions were extended.
Adviser to the Prime Minister on Finance and Revenue, Dr Abdul Hafeez Sheikh, said the existing sales tax regime was distorted due to accommodating different segments of the society and the only solution was the imposition of the new consumption tax.
Published in the Express Tribune, June 5th, 2010.
According to the Economic Survey of Pakistan 2009-10 released on Friday, the government has given Rs147.2 billion tax exemptions during fiscal year 2009-10, which are 25 per cent more than last year’s tax concessions. In 2008-09, the exemptions were worth Rs119.7 billion.
In the next fiscal year starting July, the government is planning to impose new taxes worth Rs132 billion, of which Rs70 billion, which is almost equal to customs duty exemptions, will be generated by levying the controversial Value Added Tax.
The government plans to collect Rs45 billion by taking new income tax measures and the amount is almost equal to the current income tax exemptions.
Similarly, sales tax exemptions amounted to Rs27.4 billion and the government is going to take new measures pertaining to customs duty to generate Rs17 billion.
In this financial year, the tax exemptions are also even more than the conditional money that Pakistan will get from the US under the Kerry-Lugar Act. Under the Act, the US will give $7.5 billion in civilian aid over five years.
The Economic Survey shows that almost half of the exemptions were given only on account of customs duty. Most of these exemptions were extended on the import of machinery, equipment and apparatus by hi-tech industries.
On top of that, Rs5.2 billion worth of tax exemptions were given to exploration and production companies on the import of machinery and vehicles. For the import of raw material, Rs3.8 billion tax exemptions were given.
The Federal Board of Revenue, while defending the concessions, said some of these exemptions were due to international contractual obligations.
This fiscal year, income tax exemptions are 15 per cent more than the last financial year. Almost half of the amount was lost on account of capital gains tax exemption.
The second largest sector was the enterprises as about Rs20 billion could not be netted due to waiver from taxes on their income.
On sale of fertiliser and tractors, Rs8.8 billion and Rs6.3 billion tax exemptions respectively were given. Similarly, on the sale of pharmaceutical products, Rs3.8 billion tax exemptions were extended.
Adviser to the Prime Minister on Finance and Revenue, Dr Abdul Hafeez Sheikh, said the existing sales tax regime was distorted due to accommodating different segments of the society and the only solution was the imposition of the new consumption tax.
Published in the Express Tribune, June 5th, 2010.