The economy is likely to fully respond to the targets set for the current year
By AMANULLAH BASHAR
July 08 - 14, 2002
Against the revenue target of Rs457 billion set for the fiscal year 2001-2002, The Central Board of Revenue (CB) has finally reached the mark of Rs401 billion, which is being stated as the breaking of the psychological barrier of the CBR based revenue collections.
The total amount of revenue has a shortfall of 56 billion yet it better than the previous year by Rs8 billion despite difficult conditions faced by the economy.
The target set for the current fiscal year i.e. 2002-2003 is Rs460 billion, which is most likely to be achieved in view of the new tax system introduced in the current budget, revenue experts said.
It may however be mentioned that the actual amount collected by the government is much higher than the CBR collection of Rs 401, if the non-CBR collection amount is also included in the total amount of the revenues.
The gas and petroleum sector alone gave Rs53 billion under development surcharge collection by the government, the amount of government collections may further jump if the surcharges and additional surcharge collected on the electricity consumption is also taken into account.
Meanwhile, the International Monetary Fund has said that it was still concerned about lower-than-expected tax revenue in Pakistan despite approving a $114 million loan tranche.
According to reports, Henri Ghesquiere, Senior resident representative of the IMF in Pakistan, said the Fund's executive directors had understood the "exogenous factors" that led to a shortfall in revenues but had urged Islamabad to improve tax collection and administration.
"They unanimously stressed the importance for the CBR to implement its ambitious reform programme fully so as to ensure Pakistan does receive the revenues to step its expenditures for health and education and for alleviating Poverty.
The IMF Executive Board approved the $114 million tranche as part of a 1.37 billion-dollar three-year loan programme to reduce poverty and boost economic growth in Pakistan.
The Fund waived the quarterly revenue target for the period that ended March 31, saying the shortfall in revenue reflected continued lower-than-expected imports since the September 11 attacks on the United States.
"They realize there are exogenous factors such as a shortfall in imports that has played a big role".
Pakistan, a key ally in the US-led war on terror in neighbouring Afghanistan, says its economy suffered a body blow in the wake of the September 11 events, with export orders cancelled and insurance premiums shooting up.
The trends forced the government to revise the revenue targets for fiscal 2001-2002 down to 414 billion rupees from 457 billion.
The Central Board of Revenue, which is the main tax-collecting agency, however was of the view that it collected 400 billion rupees in tax revenues by the end of the fiscal year on June 30.
"We have been told, the government would be more than satisfied if achieved Rs. 401 billion mark.
The tax collection, it may be recalled fell by 3 per cent in the first eight months of the fiscal but it improved by March with an upward trend in imports.
40 per cent of revenue is directly or indirectly dependent on imports. Since they started picking up, therefore, the situation is getting improved.
The revenue target for fiscal 2002-2003 had been set at 460 billion rupees.
The Central Board of Revenue (CBR) has finally crossed the psychological revenue collection barrier of Rs400 billion.
Till May 31, 2002, the CBR had collected Rs345 billion and in the next month of June it added an amount of 56 billion which brought the total for the fiscal 2002 to Rs401 billion.
The Rs56 billion collected in June comprises Rs21 billion sales tax, Rs20 billion income tax, customs duty of Rs9.5 billion and Central Excise duty of Rs6 billion.
The 2002 year's revenue collection of Rs401 billion is Rs8 billion higher than the total collection of Rs393 billion during previous fiscal year.
Tax experts, while analyzing the situation, said that the most surprising feature of the economic numbers was the resilience displayed by the manufacturing sector under volatile conditions. The factors working against this sector in the financial year 2002 included export disruption due to the Afghan conflict (higher freight charges, physical disruption and cancellation of export orders due to perceived uncertainty regarding ability to deliver), a global economic downturn exacerbated by Sept 11 and then war fears with neighbouring India. Large scale manufacturing during the first nine months of the year grew by 3.2 per cent while the government of Pakistan estimates that it will grow by 4.4 per cent for the full fiscal year.
The experts are of the view that the manufacturing sector will grow by 7.6 per cent in the financial year 2003 emulating its performance in financial year 2001. Key drivers in this assessment are continued volume growth in the textile coupled with better unit prices as the global economy stages a recovery.
Keeping in view the better performance of the textile sector and improved conditions on the import side, the economy is likely to respond to the targets set by the CBR for the current financial year, the experts feel.