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The present target of Rs430 billion was reduced from Rs450 billion

From SHAMIM AHMED RIZVI,
Islamabad
Nov 20 - 26, 2000

Revenue collection figures in the month of October further strengthens the apprehensions that despite all the claims by all concerned the Central Board of Revenue (CBR) will not be able to achieve the revenue target fixed for the current (2000-2001) financial year. The CBR could collect only Rs25.8 billion in October against the monthly average (for July-September period) of Rs27 billion and Rs.32 billion in September. The total collection during the last 4 months comes to Rs.105 billion against the revised (downward) target of Rs.430 billion indicating a shortfall of about 25 per cent.

Apart from the officials of the Central Board of Revenue (CBR) and the Ministry of Finance, even the Chief Executive Gen. Pervez Musharraf sounded highly optimistic that all financial targets fixed by the present government will be met. Minister for Finance 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, 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 Rs.10 billion are within reach and CBR would collect Rs.100 billion more in taxes this year".

According to provisional figures gathered from all the four wings of CBR show that the CBR has generated Rs.25.8 billion tax receipts during October as compared to Rs.32 billion in September. 2000, a sharp decline of over Rs.6 billion registering over 19 per cent decrease.

According to the sector-wise break-up sales tax receipts totalled at Rs.7.2 billion as compared to Rs.12 billion in September. Central Excise Duty (CED) Rs.4.2 billion against Rs.4.1 billion and customs duty Rs.4.9 billion as compared to Rs.6 billion. These were net collection after payment of rebates and refunds. The Ministry of Finance apprehends some difficulties with the IMF, although the collections during the first quarter showed an improvement of ten per cent over the first quarter of 1999-2000. The collection during July-Sept came close to Rs.80 billion against the CBR's target of Rs.82 billion.

It has been learnt that Gen. Musharraf who had a meeting last month with Ministry of Finance and CBR officials specifically asked the reasons for slum in the revenue collection. Various reasons were offered to cover the lapse with full assurance, however, that more than Rs100 billion increase in annual revenue will be achieved. The CBR official presented a mid process brief on the result of ongoing tax surveys and the conclusions drawn from a preliminary analysis on the disclosures made by 100,000 residents on their income sources and spending. These disclosures were regarded by the CBR as "a source for probes into the understatements of income and spending which is certain to help generate additional revenues. The CBR banks on these probes to be launched for substantial recovery of income tax" said a senior official.

The CBR officials however, worried about the next meeting with the CE who announced in the last meeting that he will meet them every month to review the situation. Some of them are suggesting that we should confess before the Chief Executive that our earlier estimates were rather ambitious and seek a slash in the revenue target. It may not be out of place to mention here that the present target of Rs430 billion was reduced from Rs450 billion (an increase of Rs.100 billion over last year figures) at the instance of IMF visiting team. A senior official of the CBR told this correspondent on condition of anonymity that this high target seemed extremely difficult to meet, so the CBR is considering to request for another downward revision in the target for the entire 12 months of the current financial year. The present trend of collection did not allow any optimism for achieving Rs.430 billion in 12 months and Rs.123 billion in the second quarter.

The CBR is also seeking a mid-quarter downward revision in tax collection baronet after recording total receipts of Rs.105.695 billion in the first four months of the current fiscal. These receipts are Rs. 7 billion higher than what was collected in the first four months last year but the October collection last year was Rs.250 billion higher than the Rs.25.75 billion collected in October this year. If allowed by the Ministry of Finance, this would be second downward revision in the first half of the financial year.

The total tax receipts in July-October period of last year amounted to Rs.98,688, against a target set for the period at Rs102 billion. This year's revised target for the first four months of the financial year was set at Rs123 billion.

The target for October 2000 was set at Rs.39 billion. The October-December 2000 target is Rs123 billion. For October the shortfall recorded by CBR in tax collection is Rs13.25 billion. To meet the Rs.120 billion target set for the Oct-Dec quarter, the CBR would have to collect taxes at the rate of Rs.47.12 billion per month.

The direct taxes target for October 99 was set at Rs.8 billion last year, which had been achieved in full, whereas, this year, the target was Rs.15 billion, and the collection fell short by Rs.6 billion as the receipts under this head for the month totalled Rs.9 billion.

The collection of custom duty in October 2000 was Rs.4.4 billion against Rs.4.56 billion in October 1999, while the central excise duty collection was Rs.3.6 billion against Rs.4.7 billion in the same month last year.