The Federal Budget may reportedly focus a revenue
target of Rs505-510 billion for the fiscal 2003-04. This assumption for
revenue target is based on the discussions between the Central Board of
Revenue and the IMF officials.
If the CBR goes on to the above target it would a 10
per cent increase in the current year's revenue target of Rs458 billion
which is well within reach at the end of the current financial year next
It is however, generally felt that instead of
focusing on the revenue target in terms of amount, it would be much
meaningful target the untaxed areas to enlarge the tax base. The
enhanced volume of amount in the revenue target gives a feeling among
the existing tax payers that they would be forced to pay additional
taxes or higher rates of the tax.
The business community in particular and the tax
payers in general also observed in a critical way that the tax collected
in Pakistan does not provide visible relief to the tax payers in their
Taxes paid on utilities are not reflected in the
quality of the service provided by the utility companies. For example,
electricity consumption has been subjected heavy taxes, but sees the
quality of services; the consumers have to bear break downs and
fluctuations in the scorching summer heat. How they could be a willing
tax payers. This pattern of utilization of taxes is visible whether it
is road tax or water tax at the provincial level. It is highly important
to create a culture supported by the willing tax payers to provide
services in the respect sector to the satisfaction of the tax payers.
Recently, the government has imposed withholding tax
on telephone bills. This tax imposition has disturbed a large number of
telephone consumers especially in the low income group, who do not claim
for the refund. It is amazing that if a telephone subscriber fails to
pay the monthly bill, the withholding tax is applied even on the
previous month's amount including on the amount of withholding tax that
becomes a compound tax. This levy should be removed at the earliest,
said a telephone subscriber.
According to annual plan, the overall GDP growth rate
for 2003-04 is targeted at 5.3 percent, budgetary deficit of 4 per cent
of GDP and inflation 3.9 percent.
The monetary growth has been envisaged at 11.3
percent and foreign exchange reserves at $11.54 billion, workers
remittances $3.36 billion and trade balance to reach at $1.25 billion.
The focus of the fiscal policy would be to reduce the
fiscal deficit to below 4 per cent of GDP and enhance the development
expenditure to 3.4 percent of GDP in 2003-04.
The plan based on growth in the agriculture sector by
4.2 percent, manufacturing sector by 7.8 percent, large scale
manufacturing sector 8.8 per cent and small scale manufacturing sector
5.3 per cent next year.
The strong economic fundamentals as well as new
venues including enhanced regional trade especially with India,
Afghanistan and expansion in country's main economic contributor i.e.
textile industry, the experts in the trade and industry are of the view
that the economy has the potential to hit the targets set for the next
Majyd Aziz, a senior representative of the business
community and the former chairman of Site Association of Industry feels
that in fact the present or the projected figures of the revenue target
does not translate the real strength of the national economy if the
entire income generated from large segments of the economy were brought
into tax net.
One of the reassuring factors is that our economy has
arrived at a take-off point which is reflected into much more imports of
machinery during the current year and the project figures of the
forthcoming financial years.
He expressed the hope that the increased imports
would help meeting the revenue target as well as overall economic
reflected in the GDP growth target at 5.30 per cent. The current GDP
estimates are now 4.9 per cent with an increase 0.4 per cent against the
target of 4.5 per cent during the current year owing to better
agriculture and large scale manufacturing performance.
For next year, the government has set the target of
GDP growth of 5.3 per cent, the strong economic fundamentals would
hopefully respond to achieve that target, Majyd said.
Currently, the most of the revenue collected from the
existing tax payers while those out of the tax net enjoy the evaded
The real irritant in the way of bringing the large
size of the undocumented areas is the complexity of the tax regime and
of courses the known characteristics of the tax collectors. The more
simplification of the tax provisions, the more revenue collection would
be the result. Apart from the simplification of the system, there is a
need to bring a receipt culture in our society as cash purchase without
receipt encourages the tax evaders to enjoy the pudding. For instance,
as against the practice in the developed country, no body in our country
bothers to ask for receipt from the bakery shot, meat, vegetable, or an
array of small purchases. As soon as the small vendors and cottage
industry is brought under tax net, the real size of the revenue
collection would be much more and would go into government kitty instead
of the pockets of the corrupt.