Prime Minister Shaukat Aziz has appreciated the role
of Chairman CBR Abdullah Yusuf and his team of tax managers for the
organization's excellent performance, exceeding revenue target during
July-December 2004-05. According to the updated data, the CBR has
collected Rs. 261.5 billion, surpassing the revenue target of Rs. 250.1
billion during first half of the current financial year.
In a meeting held at the Prime Minister's House on
Saturday last, Shaukat Aziz told Chairman CBR that the reforms process
initiated by the government will continue and all necessary resources
would be provided to the CBR. He said that simplification of procedures,
automation and avoidance of direct contact between the government
officials and taxpayers were aimed at greater transparency and these
measures have yielded commendable results. "Reforms is an ongoing
process and we will follow them in letter and spirit, he observed.
The CBR Chairman thanked the Prime Minster for his
support and said that CBR's performance during the first six months of
the current fiscal year has been exemplary. Abdullah Yusuf said that the
target was fixed at Rs.250.1 billion for the period July-December.
However, the actual receipts exceeded Rs. 261.5 billion showing an
increase of 13.5 percent from the same period of the corresponding year.
He said that the reforms agenda, use of new technology, automation etc.
have made Pakistan's revenue and tax regime efficient and transparent.
"Preliminary number indicate a healthy trend in revenue
collection". He assured that the organization would continue
working with the same devotion and dedication in the future too.
Independent economist, however, believe that this
increase in revenue generation has been mainly a result of growing
imports in the country. All four taxes have shown improvement but mainly
the custom duties and sales taxes on import stage have contributed to
improved tax collection during the first six months of the current
According to the set revenue collection target of Rs.
580 billion in the current fiscal year, the Board wants to collect Rs.
181.9 billion in shape of direct taxes, Rs. 103.2 billion in customs
duty, Rs. 249 billion sales tax and Rs. 47.7 billion in excise duty. The
CBR expects that it will surpass its tax collection target of Rs. 580
billion during the current fiscal year as the IMF insisted the
authorities to revise it upward to the level of Rs. 590 billion. The CBR
is eyeing to collect Rs. 600 billion during this fiscal year, the
The provisional revenue collection shows that the
overall direct tax collection during July-December 2004 has reached Rs.
72.3 billion against Rs. 57.6 billion last year. The tax wise details
confirm that the direct tax revenue has increased by 25.6 percent during
this period. Within the sales tax, the collection during first two
quarters had been Rs. 107.3 billion as against Rs. 99.1 billion of the
corresponding periods of last year indicating a growth of 8.3 percent.
This growth has largely been driven by the sales tax on imports where Rs.
68.6 billion have been collected during the first half year of current
financial year against Rs. 58.0 billion last year.
The tax collection machinery has started working to
come up with an integration plan of income tax and sales tax under the
reform strategy the government is pursuing with the World Bank and DFID
financial assistance to overhaul the tax administration. The tussle
between Income Tax and Customs Groups is a well-known fact existing in
the minds of dwellers of CBR headquarters and other field officers. The
Income Tax Group always raised finger about the huge perks and
privileges the Custom Group is obtaining.
The CBR high-ups are currently reviewing the reward
given mechanism for these both groups. As the Income Tax Group always
complained that the Customs men always remained able to extract lofty
amounts in the shape of rewards and they don't have such mechanism
especially after introduction of Universal Self-Assessment Scheme (USAS).
While pursing the reform strategy, the government committed with WB for
obtaining $102 million loan and $23 million grant from DFID, the CBR
posted 23 officers of the Income Tax Group in the Sales Tax
collectorates during October 2004.
According to independent experts, it should be not be
difficult for the CBR to meet the target of Rs. 600 billion for the
current financial year as the economic growth has been faster than
anticipated at the time of budget making. An increase in the import of
about $ 3 billion in the year should be enough to provide the additional
revenue of Rs. 20 billion to meet the gap between the original garget of
Rs. 580 billion and revised target of Rs 600 billion. According to them
the revenues collected on imports can further be raised if CBR develops
some effective mechanism to check under invoicing as the government is
loosing huge amount of revenues due to under invoicing.
Increased imports, on the other hand are leading to
widen the trade deficit pulling pressure on foreign exchange reserves.
Commenting on the unprecedented $ 1.8 billion trade deficit in the first
5 months (July-November) of the current financial year, Finance Ministry
spokesman Dr. Ashfaq Hasan Khan said it is not uncommon to see such a
widening gap with the economic activity accelerating in any country. He
said Pakistan is witnessing an accelerated level of economic growth,
much beyond the target of the current financial year. Therefore, the
rising level of economic activity is bound to increase the demand for
imports much faster than was anticipated, he said adding that this
higher import is largely driven by 32 percent increase in the import of
machinery and equipment, which is a good sign for the country. The
government is confident that if this trend continued Pakistan will
attain the growth rate of 8 percent in the next two year, he claimed.