KARACHI – Tax collection, in the country, has surged by 11 percent during first seven months of the current fiscal year, official sources revealed on Monday.
Pakistan has long been under fire with economic observers, at home and abroad, equally critical of less than nine percent Tax to GDP Ratio that, critiques say, is lowest in the world and should, therefore, be increased by extending the tax net particularly to untaxed segments like agriculturists and affluent class.
Data, revealed by the State Bank of Pakistan (SBP), shows that the Federal Board of Revenue (FBR) collected Rs 770.067 billion in July-January 2010-11, marking an increase of Rs 75.402 billion or 10.85 percent in the last corresponding period. The State Bank of Pakistan had calculated the FBR’s tax collections at Rs 694.665 billion during the same period in 2009-10.
However, if seen in the backdrop of existing pace and volume of tax collections the country, despite having an 11 percent annual increase, seems far from achieving the revised annual tax collection target of Rs 1.604 trillion. In addition, the federal tax collector is unlikely to achieve its monthly collection target of Rs 130 billion.
Monthly collections of the FBR exhibited a decline of 3.62 percent or Rs 4.076 billion, as in January 2011, the Board could collect Rs 108.413 billion against Rs 112.489 billion raised in the same month last year. Whereas, analysts discourage imposition of indirect taxes and propose direct taxes, the government relies masterly on the former for its tax revenues.
During the period under review, FBR collected over Rs 492.33 billion under the head of indirect taxes including sales tax and customs duties. Compared to Rs 437.587 billion in July-January 2009-10, this depicts that tax collection under indirect heads has grown by Rs 54.743 billion or 12.5 percent in the current year.
Contrarily, government receipts under direct taxes have also ballooned to Rs 277.737 billion compared to Rs 257.078 billion last year, registering an increase of eight percent or 20.659 billion in monetary terms. Amid huge pressures for economic reforms from their foreign financers like the International Monetary Fund, United State and others, economic managers in Islamabad have set a tax collection target of Rs 1.604 trillion for the fiscal year 2010-11.
Initially, the government had targeted receivables of Rs 1.667 trillion during the ongoing fiscal. However, the same was revised downward at Rs 1.604 trillion keeping in view the post-floods economic devastations in August last year.
According to SBP, quoting the FBR as a source, having collected Rs 770.067 billion collections, during a period ranging from July 2010 to January 11 (2011), the country is yet to collect Rs 833.933 billion more during the remaining five months of this financial year. To meet the revised target, FBR is said to have devised a strategy of collecting at least Rs 130 monthly, but majority of the analysts view that factors like corruption, lack of a strong check and balance and the resultant leakages of massive tax money would always haunt the cash-stripped PPP-led coalition government in terms of achieving targets.
The FBR has, reportedly, kicked off an audit drive to recover the unpaid tax amount from the corporate sector, a remedial measure that, if implemented seriously, might help the government meet its fiscal targets like that of the taxation.
