Tax collection drive on target, so far

Proposal of cutting down target takes a back seat.


Express November 24, 2011

ISLAMABAD: The government has put off a decision to revise the annual collection target after witnessing unprecedented growth in tax collection. The decision whether to revise downward the annual collection target of Rs1,952 billion will be taken after March 2012, an official in the Federal Board of Revenue said. 

“The FBR is monitoring the target and making efforts to achieve it and decided that the target will not be immediately revised,” said FBR spokesperson Riffat Shaheen Qazi while talking to The Express Tribune.

During recently held talks, the International Monetary Fund had urged the government to either revise the target or raise new taxes as the international donor believes Pakistan may not be able to achieve the goal.

The FBR’s collection rose 36% or Rs155 billion to Rs587 billion in form of taxes as of November 21, data shows. To reach the Rs1,952 billion target, the FBR needs to have a growth of 25.5 per cent over last year’s collection.

“The tax measures introduced in March last year coupled with new measures taken at the time of the federal budget have started yielding required results,” said FBR Chairman Salman Siddique.

On March 15, the FBR had withdrawn exemption of sales tax on fertiliser, pesticides and tractors. The facility of zero-rating on plant, machinery and equipment including parts also was taken away for unregistered importers. Moreover, it had net domestic sales of five major-export oriented sectors –textiles, carpets, leather, sporting goods and surgical goods – at rate of 4 and 6 per cent.

The FBR data shows that sales tax remained the main driver behind the unprecedented growth in revenue collection that too particularly at import stage. So far the authorities have collected Rs286 billion sales taxes, Rs93 billion or 48 per cent higher than the corresponding period’s collection.

During Dubai talks, the IMF had shown concerns that growth in imports may slow down in the coming months that would affect the revenue collection. There was also concern that the FBR’s bet to get significant revenue from urea import may fail if the government remains unable to import the required quantity. The FBR official said that if the government could not import urea, it will have to provide gas to domestic plants for production and the same amount would be collected at the domestic stage.

Income tax collection also increased by 31 per cent or Rs44 billion and stood at Rs188 billion. Excise duties collection rose 22 per cent to Rs46 billion while custom duties collection jumped 16% or Rs9 billion to Rs66 billion.

The official said that the IMF estimated that without any measures the government would be able to collect Rs1,938 billion.

Published in The Express Tribune, November 25th, 2011.

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