FBR seeks to revise tax target
Revision of RGST to 15%, month’s delay in imposition cited as reasons.
ISLAMABAD:
The Federal Board of Revenue (FBR) has decided to readjust and revise downwards the tax collection target of Rs1,655 billion. The target was earlier agreed upon in consultation with the International Monetary Fund (IMF).
According to a senior official of the FBR, the agreement with the IMF was reached in light of the reformed general sales tax (RGST) rate of 17 per cent and the imposition of RGST following December 1, 2010. However, the RGST rate is expected to be 15 per cent and the tax is due to come into effect from January 1, 2011 onwards. The FBR official said that he believes that achieving the target will be difficult following the downward revision in the RGST rate.
According to the agreement with the IMF, the sales tax collection target was Rs766 billion, income tax collection was Rs570 billion, customs duties collection was Rs178 billion and federal excise duty collection was Rs141 billion.
The official informed that increased tax collection from the RGST was forecast at Rs35-40 billion and revenue from elimination of sales tax exemptions was expected to be Rs20-25 billion. He added that in order to bridge the gap, the FBR will need to either implement more tax reforms or revise its target downwards.
The official added that the FBR has decided to link the tax collection target with the approval of the income tax flood surcharge, approval of a one per cent increase in federal excise duty and implementation of the RGST. He said that if the flood surcharge and the increase in federal excise tax are approved then the FBR will try to address the shortfall by administrative measures. In the other case, however, he said that the FBR will be forced to revise its target downwards.
Senate committee takes up RGST bill
The Senate’s standing committee on finance is due to start reviewing the Reformed General Sales Tax Bill 2010 on Monday. The committee is headed by Muttahida Qaumi Movement (MQM) senator Ahmed Ali. The meeting will also include Minister for Finance Dr Abdul Hafeez Shaikh, FBR Chairman Sohail Ahmed and other senior FBR officials. The committee will deliberate on the bill for 14 days after which it will be sent back to parliament.
According to sources, the committee consists of 12 members, of whom four are from the only supporting political party of the bill so far, the Pakistan Peoples Party. Of the four, only three are expected to support the bill as it stands right now and the committee faces a huge task ahead of it to try to formulate a draft that is supported by most, if not all, members.
Published in The Express Tribune, November 21st, 2010.
The Federal Board of Revenue (FBR) has decided to readjust and revise downwards the tax collection target of Rs1,655 billion. The target was earlier agreed upon in consultation with the International Monetary Fund (IMF).
According to a senior official of the FBR, the agreement with the IMF was reached in light of the reformed general sales tax (RGST) rate of 17 per cent and the imposition of RGST following December 1, 2010. However, the RGST rate is expected to be 15 per cent and the tax is due to come into effect from January 1, 2011 onwards. The FBR official said that he believes that achieving the target will be difficult following the downward revision in the RGST rate.
According to the agreement with the IMF, the sales tax collection target was Rs766 billion, income tax collection was Rs570 billion, customs duties collection was Rs178 billion and federal excise duty collection was Rs141 billion.
The official informed that increased tax collection from the RGST was forecast at Rs35-40 billion and revenue from elimination of sales tax exemptions was expected to be Rs20-25 billion. He added that in order to bridge the gap, the FBR will need to either implement more tax reforms or revise its target downwards.
The official added that the FBR has decided to link the tax collection target with the approval of the income tax flood surcharge, approval of a one per cent increase in federal excise duty and implementation of the RGST. He said that if the flood surcharge and the increase in federal excise tax are approved then the FBR will try to address the shortfall by administrative measures. In the other case, however, he said that the FBR will be forced to revise its target downwards.
Senate committee takes up RGST bill
The Senate’s standing committee on finance is due to start reviewing the Reformed General Sales Tax Bill 2010 on Monday. The committee is headed by Muttahida Qaumi Movement (MQM) senator Ahmed Ali. The meeting will also include Minister for Finance Dr Abdul Hafeez Shaikh, FBR Chairman Sohail Ahmed and other senior FBR officials. The committee will deliberate on the bill for 14 days after which it will be sent back to parliament.
According to sources, the committee consists of 12 members, of whom four are from the only supporting political party of the bill so far, the Pakistan Peoples Party. Of the four, only three are expected to support the bill as it stands right now and the committee faces a huge task ahead of it to try to formulate a draft that is supported by most, if not all, members.
Published in The Express Tribune, November 21st, 2010.