ONE YEAR OF TAX SURVEY

 

Expecting more revenues during next financial year

From SHAMIM AHMED RIZVI,
Islamabad
June 11 -17, 2001

Exactly one year after the launch of tax surveys and documentation of economy campaign in May 2000, the Central Board of Revenue briefed Islamabad journalists last week on its achievement during the year claiming creditable results, Wakil Ahmed Khan, official spokesman of the CBR said that in terms of net collection of revenues it has not achieved the results as anticipated for the first year, that it has provided huge data and vital information about the tax evaders which would help the broadening of national tax base with enhanced tax net. We can expect more revenues during the coming financial year.

Wakil Ahmed Khan admitted that there has been an increase of at least 38 billions revenues during first 10 months of current financial year (2000-2001) against about 100 billion anticipated for the year at the time of the launch of surveys and documentation campaign. The Rs. 38 billion increase in (July-April) 10 months of this year over the corresponding period last year is merely because of the survey. Inflation and rupee dollar exchange in favour of the latter during these 10 months has not impacted any increase in revenues. This was while all other economic indicators have also shown decline, meaning thereby that the revenue boost was caused by survey exclusively since new registrants were brought onto tax books, a caution against under statement of income source the figures of which are now in possession of the CBR, was sent countrywide. He said that the CBR is yet to process this information pooled with the Board. Notices would be sent to persons who are found to have misstated their sources. He hoped that the initial target of 100 billion will be fully met during the fiscal year 2001-2002. He said the survey was initially envisaged for an increase in tax receipts but now the policy has been changed. "We are not in favour of generating revenues at the cost of economy. We have revised the strategy of survey since the original policy of physically taking stocks and turnovers was not popular with the business community," he added.

The tax survey and documentations of national economy exercise was to be completed in 3 phases of 4 months each. During the year however, only two phases could be completed. The 3rd phase which was to start with effect from March 1, 2001, as per earlier schedule, has now been postponed to July 1. The reason for this postponement, is that the work related to the first two phases has not yet been completed as over 6 lacs forms out of 15 lacs distributed in the second phase are still to be retrieved from the tax payers. This delay, mainly due to the inefficiency of the CBR officials will however provide a justification to them for their failure to meet the tax collection target for the financial year 2000-2001 ending on June 30 next. For this financial year revenue collection target was initially fixed at Rs.450 billion which was later revised to 435 billion and then further down to 417 billion. Although the spokesman insists that CBR will be able to achieve the revised target but it seem rather impossible as during the first ten months (July-April) the actual collection has been approximately Rs307 billion. According to experts they would hardly meet the figure of Rs.400 billion.

Presiding over the meeting of the Ministry of Finance and CBR officials to review the progress on the ongoing tax survey in Islamabad in November last the Chief Executive Gen. Pervez Musharraf had directed the participants that they must ensure an increase of Rs.100 billion on the revenues during the current fiscal year as targeted in the budget. He, however, assured that the ongoing tax survey for documentation of economy will continue as planned at all costs. The CBR will be provided full support in their task but they must come to the expectation this time.

The Central Board of Revenue (CBR) expected a collection of revenue of Rs.435.6 billion during 2000-2001 against the actual collection of Rs.345.51 billion during the last financial year an addition of Rs.90 billion to be raised through on going tax surveys during the current financial year. They expected to increase revenue to Rs.550 billion in 2001-2002. The CBR officials assured the Chief Executive that these targets could be achieved provided the task of documentation of economy was carried out in all sectors of economy with full backing and support of Armed forces.

While the budget estimates for the current fiscal year were generally believed to be too optimistic, both the CBR and Minister for Finance Mr. Shaukat Aziz sounded more than confident that will not only achieve but exceed the target fixed. Finance Minister told newsmen that the projected 24 per cent rise in tax revenue was aggressive but not unrealistic pointing out that without much effort this year there was a 17 per cent increase in revenues. If we don't plan aggressively we will never get out of this quagmire we are in, he added.

Despite delays and inefficient handlings for various reasons, some out of control of tax authorities, it is a matter of satisfaction to note that the survey and registration drive has finally taken off in the country. The need for this drive had been felt many a time in the past but the concept of documentation could never previously be translated in to a practical reality. The present government, however, was courageous enough to take up the task, which at the time seemed impossible. Thus, a data base has been created and it is hoped that in future the drive would go on with the same momentum and spirit as it is not only desirable but also essential to ensure the economic survival of the country in the times to come.