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  • Sep 24th, 2012
  • Comments Off on FBR plans to increase tax-to-GDP ratio above 10 percent: revenue collection target to be slashed
The Federal Board of Revenue (FBR) has chalked out a comprehensive plan and tax policy to raise the Tax-to Gross Domestic Product (GDP) ratio from existing 9.1 percent to over and above 10 percent in 2012-2013 by taking administrative measures of Rs 176.1 billion including amnesty scheme.

Sources told Business Recorder here on Sunday that the federal government would slash the revenue collection target of FBR from Rs 2,381 billion in 2012-2013 to Rs 2,358.2 billion excluding sales tax estimates of Punjab Revenue Authority (PRA) of Rs 22.8 billion from services' sector during current fiscal.

Sources stated that the sales tax projection of Sindh Revenue Board (SRB) was already excluded from the budgetary projections of FBR for 2012-2013. The federal tax authorities would exclude around Rs 22.8 billion from services transferred from the FBR to the PRA which would overall brought down the revenue collection target of the FBR to Rs 2,358.2 billion from the budgetary projections of Rs 2,381 billion from 2012-2013, they added.

When this scribe inquired about the Board's strategy to achieve the revenue collection target during current fiscal, FBR Senior Member Tax Policy Asrar Rauf said that the FBR has estimated to collect Rs 176.1 billion through administrative measures including amnesty scheme, action against non-duty paid vehicles, broadening the tax base, documentation of economy, audit, recovery of arrears and revival of the Alternative Dispute Resolution Mechanism during 2012-2013. The revenue measures taken in budget (2012-2013) would generate an additional amount of Rs 33.8 billion during the current fiscal.

Senior FBR Member Tax Policy was confident that the tax-to-GDP ratio would increase above 10 percent during current fiscal due to effective strategy of the FBR with administrative and enforcement measures during the period under review. If the amnesty scheme has been successful, the FBR would be able to bring 2.5 million new taxpayers into the tax net. It has been very carefully estimated that Pakistan's tax-to-GDP ratio would cross 10 percent during 2012-2013 following positive response to the new amnesty scheme. The increase in the number of taxpayers would also have a direct positive impact on the Tax-to-GDP ratio of the country. The amnesty scheme contains such attractive features that everyone would be encouraged to come into the tax net by legalisation of their assets. The un-registered persons would voluntarily come to obtain the National Tax Numbers (NTNs) to clear their past tax liabilities. The successful implementation of the amnesty scheme would have a major impact on the tax-to-GDP ratio of the country.

Elaborating steps to achieve revenue collection target during 2012-2013, Asrar Rauf explained that the baseline figure of Rs 1,883 billion has been taken for 2012-2013. The autonomous growth of 15.3 percent in revenue has been worked out by the Planning Commission and Ministry of Finance for current fiscal. Due to this growth, the revenue would reach Rs 2,171 billion without including revenue measures during 2012-2013. If we incorporate Rs 33.8 billion revenue measures and Rs 176.1 billion of administrative measures, the tax projections of the FBR would come to Rs 2,381 billion including Rs 22.8 billion of PRA.

The nominal growth of 15.3 percent in revenue has been taken for current fiscal with Rs 33.8 billion from revenue generation measures. An amount of Rs 176.1 billion has been estimated from the administrative measures including amnesty scheme, enforcement drive against non-duty paid vehicles, effective monitoring of Afghan Transit Trade, recovery of withholding taxes, broadening the tax base, documentation of economy, detections and recovery from audit and arrears. The Alternative Dispute Resolution Mechanism would also be instrumental in generating additional revenue during current fiscal.

Responding to a query, Senior FBR Member Policy confirmed that an amount of nearly Rs 22.8 billion would be excluded from the overall budgetary target of Rs 2,381 billion during 2012-2013.

Asrar Rauf added that around 25 percent growth in revenue collection would be visible as compared to previous fiscal in case the FBR has been able to achieve the revenue collection target during current fiscal in view of effective administrative and enforcement measures.

Copyright Business Recorder, 2012


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