The preliminary analysis is being carried out to ascertain the revenue impact of surcharge on the direct taxes side. If the government imposes any kind of surcharge, it may not be applicable on indirect taxes as the burden of indirect taxes would be passed on to the consumers.
Any proposal to impose surcharge would be on temporary basis and one-time levy to generate additional funds for the victims of devastating floods in the country. However, presently revenue impacts are being worked out and nothing has been finalised.
Sources said if the government takes any kind of additional taxation measures, it would have serious revenue implications. As an alternative, the imposition of surcharge as one-time levy is being discussed in the FBR. However, surcharge is being imposed as a temporary measure for one-time basis for collecting some funds. It's yet to be seen what would be the outcome of work done in the FBR and recommendations forwarded by the tax authorities to the Ministry of Finance on the imposition of surcharge, if necessary.
As the idea of levying surcharge is at very initial stage, it is being discussed threadbare with the Ministry of Finance. If anything materialises, the Finance Ministry and FBR will have to make presentations to the President and the Prime Minister after obtaining formal approval from the political leadership. When contacted, a tax expert said that if the government imposes any kind of surcharge, it would be imposed through a Presidential Ordinance.
Meanwhile, on the conclusion of the meeting of National Assembly Standing Committee on Finance, FBR Chairman Sohail Ahmed told reporters that the federal budget is being reviewed and federal tax collection target is also undergoing revision. The federal tax collection target of Rs 1.667 trillion is no more relevant as the country is faced with historic disaster of flood where millions have lost their homes and other properties.
Infrastructure in all the provinces got damaged and thousands have lost their lives and millions have been displaced. Sohail Ahmed further clarified that reviewing federal tax projections does not mean that tax collection target is being revised downward for 2010-11. A few additional measures are being examined to generate additional revenue of Rs 15-20 billion during 2010-11.