According to the figures released by Vakil Ahmed Khan, Member Direct Taxes, on January 1, 2004, a total amount of Rs 223.9 billion was received by the tax authorities for the period under review which reflected an 11 percent increase over the figures of Rs 201.4 billion for the corresponding six months of the previous financial year.
The target of Rs 218.1 billion prescribed for the first half of this year was surpassed by Rs 5.8 billion or by about 2 percent.
This is indeed a reassuring performance of the tax collecting machinery, indicating a well-sustained growth in the revenue receipts.
The revenue figures for the half-year worked out to 43.9 percent of the targeted revenue receipts of Rs 510 billion for full year projected in the last budget.
The comparative ratio of half year's tax collection for 2002-03 was reported to be 43.7 percent which was indicative of a well planned approach to growth in revenue receipts.
It may be noted that the half-year's tax collections continue to lag behind the expected 50 percent of the revenue target for the year despite a perceptible improvement in the growth of tax receipts.
However it may be expected that the pace of revenue collections would gain momentum in the remaining six months of the current financial year. A significant feature in the first half-year's tax collections is that the amount collected during the month of December 2003 registered a sharp increase of 21 percent at Rs 54 billion as compared to Rs 44.7 billion collected in December 2002.
The extraordinary increase in collections during December 2003 contrasted with the official reports that the tax returns filed by the large-scale corporate sector decreased to 8,761 as compared to 9,138 returns filed in the month of December 2002.
It was however pointed out by the CBR spokesman that additional returns were expected from this sector over the following fortnight since some taxpayers had sought extension for the submission of their returns and therefore the shortfall was likely to be overcome.
Nevertheless, it may be emphasised here that the expected growth in the number of taxpayers/tax returns is yet to be achieved by the taxation authorities who have been working on wide-ranging plans to broaden the tax base and expect the number of taxpayers with National Tax Numbers (NTN) to increase to two million from the existing base of an estimated 1.7 million taxpayers under direct taxes head.
The growth of 11 percent in receipts during the first half of the current financial year may be seen as fairly satisfactory considering the low inflation rate under 4 percent.
However, the 11 percent rate of growth seemingly represents largely the improvement in the rate of profitability in the corporate sector.
This could be attributed mainly to all round decrease in the mark-up rates on short term and long term loans from banks.
The decline in expenses on account interest charges probably made it possible for the industrial sector to increase production both for export and local consumption.
The consequent increase in sales added to the profit earnings of the private sector and hence the increase in their tax liabilities.
By and large, the improvement in the tax collection figures was reflective of the sustained pick-up in investment activity combined with a better export performance on the basis of higher production levels in the manufacturing sector.
In this connection, the increasing sales of cement and other construction materials with support of the banking sector also spurred the rising trend in profits of the industrial sector.
Another important industry which has lately shown substantial increase in production and sales is the automotive industry in which production has increased by over 50 percent in most of the assembly plants.
The banking sector has also shown a liberal policy in offering loan coverage to prospective buyers of cars.
These developments have understandably contributed to a welcome growth in the government's tax receipts for the first six months of the current financial year.