Despite the severe shocks Federal Board of Revenue (FBR) has been able to collect Rs. 1883 billion during 2011-12 by attaining a growth of 20.9 percent.
“It is encouraging to note that the tax GDP ratio has considerably improved by 0.6 percentage points during the year and reached to 9.2 percent from the lowest level of 8.6% in the year 2010-11”, an FBR Quarterly Review said.
The FBR Quarterly Review said that Fiscal year 2011-12 was a challenging year for Pakistan Economy, energy crises and low growth in the manufacturing sector has impacted the economy to greater extent. However, despite the severe shocks FBR has been able to collect Rs. 1883 billion during 2011-12 by attaining a growth of 20.9 percent. It is encouraging to note that the tax GDP ratio has considerably improved by 0.6 percentage points during the year and reached to
9.2 percent from the lowest level of 8.6 percent in the year 2010-11.
The current issue of the FBR Quarterly Review provides an update on FBR’s resource mobilization efforts. It includes detailed analysis of tax revenues collected by FBR and elucidates various cogent factors responsible for less than the targeted collection. It added that besides analysis of tax revenues, the current issue also includes articles on `Impact Evaluation: An Ex Post Analysis of Budgetary Measures FY: 2011-12 and Monitoring of Withholding Taxes. The publication also includes articles on Pakistan Bangladesh Economic Expansion: Challenges and Opportunities and Pak-China Free Trade Agreement, Prospects and Challenges.
Statistical Appendix showing month to month and progressive collection of federal taxes collected during 2011-12 and 2010-11 by FBR is also added.
The report also quoted Chairman FBR Ali Arshad Hakeem as appreciating the invaluable efforts put in by the research team of Strategic Planning and Research & Statistics in bringing out this issue of FBR Quarterly Review. “We look foreword for receiving your valuable comments and suggestions for improving the research efforts”, he remarked.
Challenges: The FBR quarterly Review (April-June 2012) is the leading publication of FBR prepared by small research team of Strategic Planning and Statistics (SP&S) Wing, FBR. The FBR Quarterly Review has completed its journey of one decade.
During this period a tremendous research work and dissemination of information has been made possible for the researchers, educational institutions and the esteemed taxpayers through this publication.
Around one hundred articles relating to taxes, fiscal issues, budgetary impacts, industrial profiles, tax reforms and international trade have been published.
The FBR’s Quarterly Review highlighting, the FBR Tax Collection said that the Economy of Pakistan had confronted difficult challenges in the past few years, external and domestic economic shocks, political uncertainty and security problems. It added that faced with these challenges, Pakistan had implemented several reforms including under the recent expired stand-by-arrangement with IMF2, which helped the economy avoid a full blown crisis.
More recently, however, continued security issues, two major floods and large fiscal deficit have contributed to make inflation persistently high and limit growth and employment creation.
This had left Pakistan economy highly vulnerable.
Nonetheless, Pakistan economy had been recovering gradually and showed resilience. GDP growth for 2011-12 was recorded at 3.7 percent as against 3 percent in 2010-11. The commodity producing sectors and especially the agriculture sector did much better.
The agriculture sector recorded a growth of 3.1 percent and previous year’s growth rate was 2.4 percent.
Some improvements were also witnessed in the Large Scale Manufacturing (LSM) sector. This sector grew by 1.9 percent as compared to the target of 2.0 percent. The Service sector exhibited a growth of 4 percent and gained from trade activities and improvements in the commodity producing sectors. Smooth functioning of the supply chains played a key role in improving the economic situation and ensured the availability of essential items.
On the revenue front, FBR collected Rs. 1,883 billion
(provisional) at the end of FY: 2011-12, although 37.3 percent higher refunds/rebates were paid back to the taxpayers during the same period.
The growth in net revenue collection was 20.9 percent over the actual realization of Rs 1,558 billion during FY: 2010-11. Another improvement was witnessed in the performance of FBR in relative term; tax GDP ratio substantially improved to 9.2 percent in the year 2011-12 from the lowest level of 8.6 percent during the year of 2010-11.
The FBR Quarterly review said that the analysis was prepared by the research team of the Strategic Planning and Research & Statistics Wing of FBR.
Regarding FBR Revenue Collection and Target, it said that FBR revenue target for the FY: 2011-12 was fixed at Rs 1,952 billion at the time of announcement of Federal Budget.
The target was 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.
To reach the target, 25.3 percent growth was required over the actual collection of Rs 1,558 billion during Fiscal Year 2010-11.
The FBR quarterly review further said that unfortunately, economy remained confronted with general economic slowdown right from the beginning of the year.
Energy crises played havoc with the manufacturing sector which was a tax base for domestic taxes such as FED and domestic sales tax.
The consumption of energy in the industrial sector i.e. electricity and gas were the primary cause of constraint production activities in a number of industries.
According to Economic Survey of Pakistan, 2011-12, energy intensive industries (petroleum, iron and steel, engineering and electrical) shaved off 0.2 percentage points from real GDP growth in 2011-12. Also the estimated cost of power crisis to the economy was approximately Rs 380 billion per year, around 2 percent of GDP. As a result, growth in the large scale manufacturing sector was dismally low throughout the year; therefore, revenue realization from the manufacturing sector and related businesses had also been badly affected
It added that despite these unfavorable economic conditions, FBR was able to collect Rs 1,883 billion at the end of the year against the target of Rs 1952 billion fixed for the year. The target was missed by 3.5 percent.
It added that FBR had collected Rs 1883 billion during the FY: 2011-12 against Rs 1,558 billion collected during FY: 2010-11 a growth of 20.9% was registered. This achievement had been made despite general economic slowdown in the economy, particularly, the slow growth in the large manufacturing sector and less tax realization from major sectors like cement, beverages and services.
Keeping in view the deteriorating economic conditions, this performance was satisfactory to a greater extent.
It added that Rs 25 billion collected by SRB on account of services from Sindh was also included in FBR’s revenue target for 2011-12. By inclusion of Rs 25 billion in FBR collection the total receipts will go up to Rs 1908 billion.
All the four taxes had performed well during the period under review except FED where there was a negative growth of 10.8%.
