Parliamentarians and economic experts on Wednesday questioned Central Board of Revenue (CBR) data regarding uniform growth in customs duties for various products and its revenue targets and asked Finance Ministry to keep a vigilant eye on its data compilation.
Besides, the government's procedure for fixing the fiscal deficit was also criticised.
They said that during the budget for FY2004, the fiscal deficit for FY 2003 was shown at 4.5 percent which, according to them, was under-reported by the authorities.
The standing committees were also criticised and the experts said that these committees were not doing well for the monitoring the performance of different ministries.
State Minister for Finance Umar Ayub Khan, who chaired the parliamentary budget process and analysis meeting, said that "This is the one side of picture and we have to arrange a meeting where Finance Ministry, CBR and other prominent economist present their points of view and discuss issues".
Dr Kaiser Bengali, professor of economics at Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology (SZABIST) while presenting his paper "The Budget Reading between Numbers" said that during FY2003 the budget deficit was under-reported.
He said in FY 2003 Rs 57.7 billion were reported under the head "Recovery of Investment from KESC' while on the expenditure side an entry of about Rs57 billion under 'unallocables' was shown".
Enquiries revealed that these were merely accounting entries and cancelled each other out. Neither had KESC returned this huge amount to the government, nor has the government incurred this expenditure during FY2003.
The implications of these entries are, however, meaningful. Essentially, the entry on the receipts side has absolved KESC of its liabilities to the government to the extent of Rs 57.7 billion. By showing a corresponding entry on the expenditure side, the government has effectively written off KESC's losses. The correct procedure would have been to just have one entry on the expenditure side. In the event, the fiscal deficit would have risen to 5.6 percent; which is the actual fiscal deficit for FY 2003.
About composition of taxes, he said that in Pakistan the share of direct taxes is lowest in the region and stands at 26.5 percent. In India, the share of direct taxes was 29.3 percent with 40.1 percent in Iran.
While, the share of indirect taxes (including domestic 42.9 percent and international trade of 30.6 percent) was 73.5 percent, which is highest in the region, pressing mostly the poor.
In Pakistan, poorest 10 percent of the population pays 16.1 percent of their income in the shape of direct and indirect taxes, while the richest, 10 percent, pay only 12 percent. The four percentage point disparity reveals that the burden of taxes was more on poor than rich because of indirect taxes.
It was felt that uniform customs duty growth was not possible for the entire product and revenue achievement accurately with out lagging or exceeding the target was not possible and makes the data suspicious.
During 2003, out of 13 commodity groups, the customs duty on seven groups comprising chemical and chemical products; dyes, colours, paints and varnishes; iron, steel and manufactures; rubber and rubber products; plastic resins; wood pulp and papers; yarn and fabrics all grew at unvarying rate of 3.1 percent which they questioned and said how it was possible that these all grew at the same rate without change of a single point.
However, machinery; metals (other than gold); medical and photographic equipment grew by 3.2 percent. The customs duty on minerals, fuel oil (POL) increased by 382.3 percent and vehicles by 21.1 percent during FY2003.
Not different from the last years, during FY2006, customs duty on all these products also grew at uniform rate of six percent, which according to them was a big question mark on the CBR's data credibility and makes it suspicious.
They also proposed to the government that before presenting the budget in the National Assembly, a draft of the document should be made available to parliamentarians for general discussion.
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