FBR may soon resolve cases worth Rs 131 billion pending in courts: post-budget seminar told

The Federal Board of Revenue (FBR) is expecting to resolve pending cases worth Rs 131 billion in the courts soon, while it is aiming to collect over Rs 50 billion on account of administrative measures including Rs 25 billion from audit of withholding agents.
Chief Commissioner Income Tax Inland Revenue Lahore Ansar Javed stated this while addressing a post-budget seminar organised by the Institute of Cost and Management Accountants of Pakistan (ICAMP). The government has traced 2.3 million non-taxpayers in the country, which would be brought to the tax net. Out of 2.3 million, the FBR would issue notices to 0.7 million non-taxpayers in the upcoming financial year 2011-2012, he said.
Talking about the revenue collection target of Rs 1,952 billion, Ansar Javed said that the target is realistic and made on the basis of Rs 1,580 billion, while some Rs 280 billion would come through nominal growth of 18 percent and rest of the revenue would be generated through administrative measures.
The Chief Commissioner was of the view that FBR would face Rs 27 billion shortfall, as in case of relief given and revenue generation measures for the upcoming financial year. "The government is expecting to generate Rs 81 billion through taxation measures taken in March that including elimination of tax exemptions of fertilisers, pesticides and others", he maintained.
It is worth mentioning here that the government has fixed revenue target at Rs 1,952 billion for the upcoming financial year against the revised target of Rs 1,588 billion for outgoing financial year, he said. The break-up of Rs 1,952 billion revealed that, Rs 743.60 billion would come through direct taxes against Rs 626.90 billion of the outgoing year and Rs 1330.58 billion as indirect tax against Rs 1,05246 billion of the year 2010-11.
The break-up of indirect taxes shows that Rs 206.40 billion is estimated through customs duty against Rs 173.30 billion, Rs 836.70 billion as sales tax against Rs 654.60 billion, Rs 165.60 billion as Federal Excise Duty against Rs 132.90 billion, Rs 120 billion as petroleum levy against Rs 90 billion, Rs 1.81 billion as other taxes against Rs 1.59 billion and Rs 75 million as airport tax against Rs 71 million of the outgoing fiscal year.
Ansar Javed said that Pakistan has long been experiencing recessionary trends. Our cash strapped position caused by massive national debt has kept our economy at very low ebb. By increasing revenues and exports we could have salvaged the position, but things have never gone the way we have been planning. The ground reality is that we usually find it difficult to generate enough revenue and increase exports whereas the expenditure position has all along been getting inflated due to inflationary trends, he added.
Speaking on the occasion, the ICAMP National Council Member Shahzad Ahmad Awan said that budget was full of presumptive taxes and the unjust policy of relying on indirect taxation had continued over the past nine years. The Federal Budget is prepared in accordance with the Budgeting and Accounting Classification System (ACS) as approved by the GOP as integral part of the new accounting model.
A new budget preparation method, called the "Output Based Budgeting" has been introduced, which represents the Federal Budget by Services and effects of services on target population link with Performance Indicators and targets over the three years period.
The Institute Honorary Secretary Ziaul Mustafa Awan said Pakistan's tax set-up was more pro-rich than pro-poor. Resultantly, the rich paid less tax than they should and poor were compelled to pay taxes in spite of the fact that they had a very low capacity to pay.
Member Tax Committee Lahore Chamber of Commerce and Industry (LCCI) Abdul Razzaq said the most tax efficient form to do business, other than individual, was the creation of an association of persons (AOP) because the starting rate in case of AOP was 0.5 percent with exemption limit of Rs 100,000. Due to these incentives, the growth rate of AOP's was 60.6 percent in tax year 2009. On the basis of this growth rate, the focused person of the budget 2010-11 was AOP. AOP was targeted in four ways. First, a flat tax rate 25 percent was proposed. Second, exemption limit of Rs 100,000 was abolished. Third, in case of loss, a minimum tax at 1 percent of turnover was postponed on those AOP's was postponed to pay advanced tax. On the other hand, it is claimed by the government that all persons with an income level of up to Rs 300,000 are exempt from tax.
Tax Consultant Mian Muhammad Ramzan termed the indirect taxation regime against the economic principles and against principles of equality and said that due to failure of tax collecting machinery, for the last many years, government has been collecting tax revenues through indirect taxes as short cut measures. Even more than 50 percent of Income Tax is being collected through withholding tax regime, a form of indirect taxation, which is against the basic principles of direct taxation.
Imposing indirect taxation means that taxing all equally, which should not the motive of any welfare state. The unscrupulous system of the govt has been failed to collect tax revenues from the potential taxpayers that why trying to shift it towards indirect taxes. The indirect taxation increases the inflation, undue burden on the community and increases the prices of the commodities, he added.