Tax collection declines, target to be missed

ISLAMABAD: The negative effects of the devastation caused by the floods has started showing on tax receipts as only Rs24 billion have been collected during the first 16 days of August. The amount is Rs2 billion less than the tax collections recorded during the same period of the last fiscal year.

A senior official of the FBR told The Express Tribune that it has collected a total of Rs24 billion during the first 16 days of the current month, compared with Rs26 billion rupees collected in the first 16 days of August 2009.

Officials disclosed that the tax receipts by this time of the month should have been about Rs40 billion. The pace of tax receipts has slowed down due to the damage wreaked by the floods.

It has been learnt that the overall target set for the current month was set at Rs102.4 billion rupees but since only Rs24 billion have been recovered so far, the chances of the target being met are very slim.

Sources also said that the tax target for August was set with an addition of 18.8 per cent to that of the last year.

Of the total, the target of the direct tax (income tax) receipts was kept at Rs32 billion. Of the indirect taxes, Rs46 billion was the targeted collection in the form of sales tax and Rs12.4 billion in the shape of federal excise duty.

Flood surcharge

The Federal Bureau of Revenue (FBR) has decided that it will fix the rate of flood surcharge or flood duty in the light of the figures of the damages by the flood.

An official of the FBR said that after the statistics about the total damages caused by the floods will have been compiled, the amount of the additional revenue required will be estimated and the rate of flood duty or flood surcharge will be decided.

It has been learnt that the surcharge will not be levied on income but rather on the amount of tax deposited.

Published in The Express Tribune August 18^th, 2010.