Speedy implementation of ongoing reforms in CBR will further improve the tax collection by facilitating ordinary taxpayers



Apr 19 - 25, 2004





The claim of the Finance Minister, Shaukat Aziz, that Pakistan's economy is on its way to a steady turnaround is fully supported by healthy developments in different sectors. Most forceful testimony comes from the fact that both the revenue collection and export targets set for all the 3 quarters (July 2003 to March 2004) of the current financial year (2003-04) have not only been met but surpassed.

Keeping in mind the track record of the Central Board of Revenue (CBR) which never came up to the mark in the past, this performance is indeed a historic achievement. The CBR has collected nearly Rs.352 billion during the first nine month (July-March) against the target of Rs.350 billion and against Rs.310 billion during the corresponding period during the last year showing a net-increase of about 13.5 percent. The CBR has to collect Rs.108 billion during the remaining 3 months to meet the annual target of Rs.510 billion. CBR expects to meets this target easily as the collection figures are always heavy during the last quarter. Exports during the period under review also maintained its upward trend. Exports amounted to nearly $9 billion against set target of $8.75 billion. It registered an increase of about 13 percent as compared with $7.856 billion during the same period last year. Exports in March 2004 crossed $1 billion level and to achieve the annual target of $12.1 billion, country nearly need $3.1 billion during the last quarter (April/June 2004) which is likely to be met easily. Import during this period stood at $10.5 on March 31, 2004 against $9 billion during the same period last year showing an increase of about 16 percent.

A very positive change has been witnessed in the CBR during the last few years as the tax agency has not only achieved targets, but also surpassed them. Pakistan's revenues crossed Rs. 10 billion mark in 1974-75 and Rs.100 billion in 1989-90. The target for 2003-04 is Rs.510 billion, showing the quantum jump on the part of collections and widening of the tax net.

Speedy implementation of ongoing reforms in CBR will further improve the tax collection by facilitating ordinary taxpayers. The new Chairman of CBR, Abdullah Yusuf is determined to make the tax policy investor-friendly as the investment could not come to any country or growth rates could not be achieved unless the investor was confident of getting reasonable rate of return.



Due to unexpected rise in imports it will not be possible to contain the trade deficit to $1 billion as per estimates in the budget. It is likely to cross to about $2 billion by end of the current fiscal. It has already reached to $1.6 billion during the first nine months against $1.1 billion during the same period last year.

According to analyst, this rise in imports is a healthy sign as goods arrived from foreign countries mainly constituted machinery, raw material, iron and steel, other chemicals consumed in the local industries such as textile, engineering, automobiles, electronic sector etc. The import bill of oil, since the beginning of the current fiscal year, is showing a downward trend as import of furnace oil is halted after production at local refiners rose sharply during the period.