. .

Revenue collection during the first quarter

The CBR has collected only Rs.76.5 billion during the first quarter as against its original target of Rs.94 billion which was later revised downward to Rs.87 billion


Oct 16 - 22, 2000

Apart from the officials of the Central Board of Revenue (CBR) and the Ministry of Finance, even the Chief Executive Gen. Pervez Musharraf sound highly optimistic that all financial targets fixed by the present government will be met. The situation on the ground, unfortunately is different.

Minister for Finance Mr. Shaukat Aziz and CBR officials have repeatedly claimed that the target of Rs.100 billion increase in the revenues during the current financial year will not only be met but surpassed by a high margin. While speaking as a Chief guest at the APNS annual function at Karachi, last week, Gen. Musharraf boastfully announced that all financial targets set by the government for revenue generation and revival of economy are being achieved and there was no reason for despondency. Export target of $10 billion are within reach and CBR would collect Rs100 billion more in taxes this year", he added.

The factual position is that the CBR has collected only Rs.76.5 billion during the first quarter of the current financial year (July-September 2000) as against its original target of Rs.94 billion which was later revised downward to Rs.87 billion because of the extension in the last date of Income tax return from Sept. 30 to Oct. 15, 2000. This argument for a downward revision is devoid of any substance because since decades the last date of Sept. 30 is always extended first Oct. 15 and then to Oct 31. Extension in the deadline this year is not a new phenomenon to provide justification for a downward revision.

The Central Board of Revenue sources revealed that a sum of Rs.29.1 billion was collected in September, whereas, in the first two months of the quarter (July-August) a total of Rs.47.4 billion were collected. The net amount thus recorded for three months totalled Rs.76.5 billion, which fell short of the revised target by Rs.10.9 billion. However, CBR owes Rs.4.5 billion in customs rebate claimed by the exporters, while the unpaid sales tax refund at the close of the financial quarter amount to Rs.2.8 billion with Rs.7.3 billion payable on account of net receipts recorded in the quarter.

Total tax achievement for first quarter stands at Rs.69.1 billion. The target was revised downward in September from Rs.90 billion to Rs.87.4 billion, of which the actual net collection in July-September quarter fell short by Rs.18.3 billion.

As per CBR's books on tax collection during the quarter (at Rs.29.1 billion), the sales tax and direct taxes wings backed Rs.10.5 billion each, in September. The Customs Department received a sum of Rs.5 billion in duties during the month, while the central excise collection was Rs.3 billion.

The respective tally of collection for each of the four CBR wings in the first quarter now stands as follows. Direct taxes Rs.22.4 billion(against the target of Rs.26 billion); Sales Tax Rs.29.9 billion(against the target of Rs.34.8 billion); Customs Duty Rs.12.7 billion (against the target of Rs.14.4 billion) and Central Excise Duty Rs.11.4 billion (against the target of Rs.12.2 billion).

The 12 month target of tax collection for 2000-2001 has been reduced from Rs.435.7 to Rs.430.5 billion. The total collection in the first quarter at Rs.69.1 billion, the CBR would now have to achieve the remaining amount of the estimated tax receipts of Rs.361.4 billion in the rest of the three quarters.

The quarterly tax collection target, under the revised 12-month estimate, now stands at Rs.120.46 billion. To achieve this, the CBR would again need to revise upward the estimates for each tax-head, which were revised downwards in September 2000.

The present estimates for each head are as follows; Customs Duty Rs.65.5 billion (original budgeted Rs.73 billion) Central Excise Duty Rs.50.5 billion (original Rs.52.6 billion) Direct Taxes Rs.137.5 billion and Sales Tax Rs.177 billion (original Rs.172 billion).

Re-estimation, however, would be carried out after assessing the collection trend in the month of November, say CBR sources. They added that there are indications that the CBR would keep the tax collection estimates for the current financial year fairly flexible, in view of the advice of IMF experts that the present estimates should be reviewed in the light of changes made in the federal budget 2000-2001, which expands of scope of self-assessment

It has been learnt that Gen. Musharraf who had a meeting with Ministry of Finance and CBR officials specifically asked the reason for slum in the revenue collection. Various reasons were offered to cover the lapse with full assurance, however, that more then Rs.100 billion increase in annual revenue will be achieved. The CBR official presented a mid process brief on the result of on going tax surveys on the conclusions drawn from a preliminary analysis on the disclosures made by 100,000 residents on their income sources and spending. These disclosures are being regarded by the CBR as "a source for probe into the understatements of income and spending which is certain to help generate additional revenues. The CBR banks on these proves to be launched in mid-October for substantial recovery of income tax" said a senior official.