The Federal Board of Revenue suffered Rs 900 million loss in the shape of customs duty due to non-clearance of imported High Speed Diesel (HSD) during September/ October, 2010 following devastating floods/strikes in Karachi, reflecting heavy reliance on dutiable imports for increasing revenue collection in 2010-11.
Sources told Business Recorder here on Tuesday that the FBR has compiled a report for the Finance Division on the revenue implications of floods, law and order situation, strikes and heavy reliance of the FBR on the dutiable imports during 2010-11. According to the report, the FBR is mostly relying on the dutiable imports and any stoppage of clearance of imported items will have direct impact on the collection of customs duty.
The tax base for the purpose of customs duty is primarily based on dutiable imports, which in turn depends upon the over all national and international economic conditions. Any increase or decrease in the volume of dutiable imports is subsequently reflected in revenue collected under the "HEAD" of Customs Duty. In recent past, factors like nation-wide floods, law and order situation, (particularly the strikes in Karachi) resulting in repeated closures of economic activity, and severe energy crises, have greatly affected customs revenue collection.
For example, the Non-clearance of HSD due to floods caused a revenue shortfall of approximately Rs 900 million in the months of September & October 2010 alone. Such heavy reliance on dutiable imports leaves a very narrow opportunity for the Customs to increase revenue through administrative measures.
Moreover, as the revival and growth in the industry and promotion of exports warrant exemptions and concessions which further erode the customs duty base already narrowed by gradual/regular customs tariff rationalisation which effectively means reduction in duty rates, sources said.
It is further pointed out that in pursuance of the said government's policy and also to provide relief to the common man, no major revenue generating measures were taken in the budgets for financial years for 2009-10 and 2010-11. There was, in fact, net negative impact of Rs 173 million and Rs 705 million in the respective years, FBR said.
Despite the above mentioned handicaps, the field formations of Customs Wing have generated customs duty of Rs 4.8 billion during the first six months of current fiscal year which is in addition to the revenue collected through normal imports. The additional revenue during this period has been collected through special administrative measures like improved valuation, checking misdeclaration and realising revenues stuck up as arrears and through aggressive pursuance of cases under litigation. This duty is also 22 percent higher than that collected under same head of special initiative during July-December, 2009-10.
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