According to the provisional figures of tax collections issued by the Central Board of Revenue, an amount of Rs 31.8 billion was secured in the month of August 2004, while the total amount for July and August 2004 stood at Rs 62.4 billion which reflected a 16.7 percent increase over the corresponding months of the previous financial year.
In a statement the other day, the Chairman of the Central Board of Revenue, Abdullah Yousuf, expressed his confidence that CBR's target of Rs 104 billion tax collections for the first quarter July-September would be achieved by the various taxation departments.
The tax collection performance of the CBR during the past two months will thus be rated as fairly encouraging, and it may be expected that the full year's target of Rs 580 billion envisaged in the annual budget, would be successfully realised.
The target for the current financial year is 13.7 percent higher than the previous year's tax revenue of Rs 510 billion which had represented a growth of 10.8 percent from the revenue collections of Rs 460 billion of 2002-03.
The relatively higher growth target for 2004-05 seems to have been set by the government keeping in view the visible turnaround in the economy during the last two years.
Investment activity in the major sectors of the economy, specially in the industrial sector, has gained momentum as could be noted from the textile industry's imports of machinery worth over $2 billion during the past two years for carrying on expansion, balancing and modernisation in its production facilities.
These efforts in the country's major industries are reflective of hectic preparations to meet the challenge of competition in the export market in 2005 and onwards in the wake of an end to quota restrictions on exports of textiles to the developed countries, namely USA and European Union, besides other major importers.
At the same time, the growth in exports by 10 percent in the last financial year with proceeds reaching a record level of $12.27 billion also pointed to a perceptibly higher level of production in the country's export industries, besides an overall rising tempo of economic activity.
If seen in this perspective, the potential for a well sustained rise in tax revenue has been steadily built up, which can be successfully exploited by the CBR by adopting better strategies for the task of achieving higher tax collections.
These strategies include improved interaction between the taxation officials and the taxpayers, simplification of procedures of tax assessment, and implementing automation programmes, specially in customs and sales tax regimes etc.
The measures such as establishment of large taxpayers and medium taxpayers units seem to have contributed positively to the improvement in tax collections. It will be of interest to recall here that the CBR's surveys to discover new taxpayers in the income tax regime have proved to be quite useful.
As a result, the number of income taxpayers increased from 1.38 million in July 2002 to 1.56 million in July 2003 and further to 2.023 million in April 2004 - an increase of 46.6 percent in two years.
The number of sales taxpayers also increased from 145,687 in July 2002 to 157,411 in July 2003 and further to 161,648 in April 2004 - an increase of 11 percent in two years.
These statistics which were part of the last budget's documents indicate a fair measure of success in CBR's efforts to broaden the base of taxpayers.
However, the increase in the number of sales taxpayers reflected a rather slow pace and therefore the need to further extend the net for new sales taxpayers can hardly be overlooked. It may be pointed out here that the expected tax collection of Rs 104 billion in the first quarter of the current financial year would work out to an average monthly collection of Rs 34 billion as against which the average monthly collection on the basis of the full year's target of Rs 580 billion would come to Rs 48.33 billion.
This shows that the tax collections for first three months of the 2004-05 are considerably on the lower side although the amount conforms to the target set by the CBR. The fulfilment of the target for the full year would therefore require more vigorous efforts on the part of the taxation departments in the coming nine months.
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