ISLAMABAD: Federal Board of Revenue (FBR) Chairman Asim Ahmad, Monday, said that so far the FBR is not considering new taxation measures through a mini-budget, on the demand of the International Monetary Fund (IMF) and to overcome revenue shortfall through policy and administrative/ enforcement measures in the second quarter of 2022-23.
Briefing the National Assembly Standing Committee on Finance at the Parliament House, the FBR chairman said that so far, the government has decided not to take any new taxation measures, as revenue collection position during July-October (2022-23) is on track. “So far, no mini-budget is under consideration”. However, import compression has adversely affected the taxes collected at the import stage.
Instead of new taxation measures, the top priority has been given to administrative and enforcement measures including anti-smuggling efforts, accurate valuation of imported goods, track and trace system, point of sales (POS), integration of tier-1 retailers, tax demands, Directorate General of Digital Invoicing and Analysis (DGDIA) and recovery of arrears, he said.
Among other measures, the policy measures taken in the last budget (2022-23) included increase in withholding taxes rates and taxes on immovable properties and shares.
The provisional collection during July-October (2022-23) stood at Rs2,149 billion which is in excess by Rs5.4 billion from the target. The target for November-June (2022-23) has been projected at Rs5,321 billion. The required growth in revenue is 21.5 percent to achieve the target of Rs7,470 billion for 2022-23.
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Asim Ahmad informed that import compression had a negative impact on revenue collection and as now some ease in import is being given, it would have a positive impact on taxes.
The data revealed that the overall tax collection from imports witnessed a decrease of 0.6 percent during July-October (2022-23). Sales tax collection on imports witnessed three percent decrease during July-October (2022-23) and the Federal Excise Duty (FED) collection witnessed 56 percent decrease at the import stage.
Sharing the revenue risks, the FBR chairman stated about the sudden policy changes like removal of fixed sales tax on electricity bills from July 2022. Other revenue risks included declining demand due to inflation, devaluation and high-interest rates, reduced GDP growth, reduced size and spending of the public sector development programme (PSDP), floods and transport disruptions, adding import compression would further enhance in the coming months.
Asim Ahmad said the political scenario and economic uncertainly also has an impact on revenue collection.
He said 0.1 million new taxpayers have filed income tax returns for the tax year 2022.
When asked about the Tax-to-GDP ratio, the FBR chairman stated that the tax-to-GDP ratio now stands at nine percent.
The creation of income tax demands stood at Rs15 billion during 2022-23 against Rs5 billion tax demand created during last fiscal, reflecting an increase of Rs10 billion.
Chairman FBR Asim Ahmed further said that there is no plan at this point in time for imposing new taxes of Rs600 billion as being reported in the media.
He said that the tax target for this financial year is Rs7,470 billion but due to floods, the targets for the current financial year are being changed and the FBR revenue may be affected after the revision of targets. There is no plan to impose new taxes on IMF demand, he said, adding that discussions with the IMF are continuing and Fund has expressed satisfaction over tax revenues for the last month. He said that there may be pressure on taxes at the domestic level but the effort is to increase the revenue through administrative measures.
FBR chief said that so far tax returns have been filed by 2.5 million people in the current fiscal year and more are to file as the due date for filing of the returns has been extended. Last financial year, 3.6 million returns were filed, according to the chairman FBR.
The share of direct taxes in the total tax collection is 62 percent, and Rs52billion tax was collected last financial year with income tax returns.
He said that the discussion with the IMF will be held today (Wednesday) on the issue of taxes. The IMF had expressed satisfaction with the performance in the last review.
If there is a decrease in imports, there will also be a decrease in revenue and added that tax-to-GDP ratio is at nine percent following rebasing of the GDP, he said.
Copyright Business Recorder, 2022
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