July-Feb collection falls short of Rs25bn
ISLAMABAD, March 3 The next coalition government, possibly led by the Pakistan People`s Party, is likely to face a massive revenue shortfall for the current fiscal year, raising fears of higher than expected budget deficit.
The revenue collection during the first eight months (July-February) of 2007-08 recorded a shortfall of Rs25 billion to Rs579.7 billion against the downward revised target of Rs605 billion set for the same period, according to official data of Federal Board of Revenue (FBR) released on Monday.
The government will have to raise Rs445.3 billion in next four months (March-June) to achieve the Rs1,025 billion target which seems to be a far cry as the FBR realised Rs294.13 billion in the same period last year, said a senior tax official.
Tax experts said the next government would have little fiscal space to fine-tune the economy before announcing budget for 2008-09 to raise revenue collection by broadening the narrow tax base.
They said the World Bank loans obtained for reforming tax administration were mostly spent on establishing new tax offices, purchase of cars, computers and import of furniture from China.
They said that the previous government had either exempted or reduced duties and taxes on import of maximum luxury items while it heavily taxed items like edible oils. The tax component of per kg of edible ghee/oil stood around Rs30.
A source in the PPP told Dawn that underhand clearance of containers of goods through new computerised system caused heavy losses to the national kitty. He added that there was no post-clearance audit system in place to determine the concealment of duty.
He said that the valuation directorate had also confiscated some miscellaneous containers, which were cleared at lesser duty. He said that many cases of fraud in sales tax and customs refunds had also been unearthed revealing weakness in the tax system.
A senior tax official said the loss in the income tax collection was much higher compared with the projected target.
The FBR has not issued income tax target for the eight months, however, according to rough estimates the income tax collection alone is facing a shortfall of around Rs20 billion during the period under review.
Tax-wise break up showed that the income tax collection stood at Rs213.576 billion during July-Feb period against Rs211.17 billion the same period last year, showing just 1.13 per cent growth.
However, the income tax collection was behind when compared with the target projected for the period. The FBR has not issued the target figure of the income tax for the eight months.
The sales tax collection went up by 15.5 per cent to Rs224.904 billion during the period as against Rs194.716 billion last year. The collection on account of customs reached Rs85.199 billion during the period under review against Rs79.643 billion last year, indicating a marginal growth of 6.96 per cent.
The collection under the head of federal excise duty went up by 30.19 per cent to Rs54.267 billion as against Rs41.68 billion the same period last year.
The targets of the indirect taxes were not released by the FBR to determine its actual impact vis-Ã -vis respective assigned targets.