ISLAMABAD - The Federal Board of Revenue (FBR) in its quarterly report has noted that revenue collection target of Rs 2,381 billion set for the ongoing financial year (2012-2103) is a challenging one.
According to the quarterly report, tax collection target of Rs 2,381 billion set for financial year 2012-13 is challenging one, as about 27 per cent growth over the previous fiscal year (2011-2012) in revenue collection would be required to achieve the target. Keeping in view the huge target, FBR field formations will have to strive hard and make all-out efforts to achieve the revenue target of Rs.2, 381 billion for the current fiscal year.
The FBR management is confident that despite all challenges the organization will establish a progressive, credible and trustworthy image and will improve revenues through providing quality facilitation services and a tax-compliant culture. The efforts will be supported by automation of the tax system. The integrated Tax Management System will provide assistance to all collectors and policymakers to deal with revenue collection. There will be focus on broadening of tax base and effective audit and enforcement for more resource generation.
According to the report, the Federal Board of Revenue (FBR) had collected only Rs 1883 billion revenue in the previous fiscal year 2011-2012 against the target of Rs 1952 billion, leaving huge shortfall of Rs 69 billion.
However, the report stated that revenue collection of Rs 1883 billion in last fiscal year 2011-2011 showed growth of 21 per cent compared with the collection of Rs 1558 billion of its preceding year 2009-2010. The tax to GDP ratio increased to 9.2 per cent in last fiscal year 2011-2012 from 8.6 per cent of its preceding year 2009-2010.
The report revealed that FBR had collected Rs 738.8 billion as direct tax, Rs 804.5 billion as sales tax, Rs 122.5 billion as Federal Excise Duty (FED) and 217 billion as Custom duty in the last financial year 2011-2012.
According to the report, FBR revenue target for the FY2011-12 was fixed at Rs.1, 952 billion at the time of announcement of federal budget. The target was linked with expected growth in GDP, the rate of inflation, tax buoyancy and other key economic indicators such as growth in the Large Scale Manufacturing sector and imports.
To reach the target, 25.3 percent growth was required over the actual collection of Rs 1,558 billion during Fiscal Year 2010-11. Unfortunately, economy remained confronted with general economic slowdown right from the beginning of the year. Energy crises played havoc with the manufacturing sector which is a tax base for domestic taxes such as FED and domestic sales tax. The consumption of energy in the industrial sector i.e. electricity and gas are considered to be the primary cause of constraint production activities in a number of industries.
The report stated that according to Economic Survey of Pakistan, 2011-12, energy intensive industries (petroleum, iron and steel, engineering and electrical) shaved off 0.2 percentage points from real GDP growth in 2011-12. Also the estimated cost of power crisis to the economy is approximately Rs 380 billion per year, around 2 percent of GDP. As a result, growth in the large scale manufacturing sector was dismally low throughout the year; therefore, revenue realization from the manufacturing sector and related businesses has also been badly affected.