Federal Board of Revenue (FBR) has fixed a revenue collection target of Rs1.952 trillion for FY 2011-12, which shows an increase of 23 percent over a revised revenue target of Rs1.588 trillion for current fiscal year.
Economic experts term this target unrealistic and overambitious considering current economic circumstances.
Official documents made available to Pakistan Today, indicate that the FBR, on the base of current year’s revised revenue target of Rs1.58 trillion, has anticipated that it would collect Rs1.848 trillion in FY 2011-12, with an additional Rs104 billion through new revenue measures. Figures point out that FBR has projected that Rs92 billion would be collected in consequence of removal of exemptions and zero-ratings, Rs9 billion would be generated by revising Federal Excise Duty (FED) on cigarettes and Rs3 billion would be recovered by increasing advance tax from two percent to three percent for commercial importers.
To achieve this all time high revenue target, the FBR has also recommended strict measures to curb under-invoicing and smuggling through Afghan Transit Trade (ATT). Official draft indicates that FBR has underlined the need of improving equipment support such as weigh bridges, container scanners and tracking posts to monitor the movement the containers.
FBR has underscored that its valuation system will be improved by using of international trading data such as Mattel Bulletin and LME prices for proper valuation. Electronic data exchange between Pakistan and Afghan Customs will be encouraged. Official document points out that FBR has recommended to obtain financial guarantees equivalent to the taxes, which would be released after cross-matching of data with Afghan Customs.
In addition, FBR has introduced some enforcement measures too. Transport of goods destined for Afghanistan has been restricted to vehicles of customs bonded carriers hired by National Logistics Cell (NLC) for effective monitoring and inventory control.
The loading and unloading of products in containers and provision of partial shipments have been discontinued. A national database has been established, which provides online access for verification of mis-declarations of value. Official documents disclose that a mechanism for exchange of data through Electronic Data Interface (EDI) is also being established at Torkhum and Chamman Customs stations.
However, commenting on the revenue target for FY 2011-12, former finance minister Dr Salman Shah said that it was an overambitious target. He underlined that it would be hardly achieved if the government imposes Reformed General Sales Tax (RGST) and the economy grew on minimum four to 4.5 percent. He pointed out that the government fixed revenue target of Rs1.667 trillion for the current fiscal but considering the economic situation it had to revise it to Rs1.588 trillion, though it would also not achievable till June 30. Former chief economist Dr Pervez Tahir termed it an unrealistic target.
He stated to achieve its revenue target, the government had to introduce new measures, but it had proved unwilling to impose the RGST or an agriculture income tax. Considering the current year’s revenue collection figures, he underlined that the government had to revise its impractical revenue collection target. g
