FBR releases quarterly review for April-June 2012

Claims growth achieved in various tax heads despite economic shocks.


September 14, 2012

ISLAMABAD: The Strategic Planning and Statistics Wing of the Federal Board of Revenue (FBR) has released its Quarterly Review for April-June 2012. The quarterly review – which highlights the FBR’s tax collection efforts – says on the outset that the economy of Pakistan has been confronted with challenges, external and domestic economic shocks, and political uncertainty and security problems in the past few years.

In light of these challenges, Pakistan has implemented several reforms: including a stand-by arrangement with the International Monetary Fund, which, the report says, helped the economy avoid a full-blown crisis. However, the report cites continuing security issues, two major floods and a large fiscal deficit as having contributed to inflationary pressure and limited growth and employment creation. These have left the Pakistani economy highly vulnerable, the report notes.

Regarding the FBR’s revenue collection target, the report says that the target for fiscal 2012 had been fixed at Rs1.952 trillion: linked with expected growth in GDP, the rate of inflation, tax buoyancy and other key economic indicators such as growth in the Large Scale Manufacturing sector and imports.

On the revenue front, the FBR says, provisionally, that it collected Rs1.883 trillion by the end of fiscal 2012, even as refunds and rebates paid back to taxpayers were significantly higher during the period. Net revenue collection was 20.9% higher over the actual realisation of Rs1.558 trillion during fiscal 2011, claims the report. Another improvement was witnessed in the tax-to-GDP ratio, which improved to 9.2% in fiscal 2012, from the lowest level of 8.6% during fiscal 2011.

The FBR quarterly review further says that the energy crises played havoc with the manufacturing sector, which is a tax base for domestic taxes such as the Federal Excise Duty (FED) and the domestic sales tax. Growth in large scale manufacturing sector was low throughout the year, says the report; therefore, revenue realisation from the manufacturing sector and related businesses was badly affected.

It adds that Rs25 billion collected by the Sindh Revenue Board on account of services from Sindh was also included in the FBR revenue target for fiscal 2011-12. The report claims that after inclusion of this figure, total FBR receipts go up to Rs1.908 trillion.

It goes on to say that all major taxes recorded a positive growth trend during the period under review except the FED, which saw collection decline by 10.8%. Major reasons behind the negative growth is the abolition of the Special Excise Duty (SED) both at import and domestic stages; reduction in FED rates on beverages from 12% to 6%; and reduction in FED rates on cement from Rs700 per ton to Rs500 per ton.

Collections under direct taxes clocked in at Rs738.8 billion; higher by 22.6% as compared to the corresponding period of the previous year. Similarly, an amount of Rs804.8 billion was collected under the sales tax head during fiscal 2012; indicating growth of 27.1% over the collection of Rs633.4 billion in the preceding year. This is partially due to efforts to broaden the tax base, and removal of zero rating and major sales tax exemptions.

Meanwhile, sales tax collection from imports registered 39.4% growth. Around 15% of this growth was due to increased sales tax collection from the domestic side. Furthermore, Rs216.9 billion was collected as customs duty during the year. The collection of customs duty was 17.3% higher, as compared to Rs184.9 billion collected in the corresponding period of the previous year. This achievement was made despite only 6.1% growth in dutiable imports during the period under review, the report claims.

Published in The Express Tribune, September 14th, 2012.

 

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