The share of sales tax on imports in total sales tax collection has come down from 48 percent in the first half of 2008-09 to 45 percent in July-December 2009-10. The FBR quarterly report, issued on Saturday, said that collection of sales tax on imports grew by only 5.3 percent, against decline of growth in the value of imports by 9.4 percent.
The major reason behind this mismatch was robust growth in the collection of motor spirit, furnace oil, oilseeds and sugar which resulted in positive growth in the overall collection of sales tax on imports despite decline in the overall imports. Ten major revenue spinners contributed around 81 percent of the sales tax import collection during July-December 2009-10.
The petroleum sector was the top revenue generation source of sales tax imports by contributing 2/5th (40 percent) of the collection of sales tax on imports. Due to comparatively low prices of petroleum during first half 0f 2009-10, the growth in collection of sales tax on import was hampered. As far as the collection of plastic, second major source is concerned; the collection grew by 6.5 percent, mainly due to 4.4 percent growth in the value of imports.
Edible oil is (Ch:15) the third top source of sales tax imports with around 8 percent share in total sales tax imports (STM). The collection of sales tax on imports from edible oils recorded a negative growth of 5.1 percent in the collection due to 18.6 percent decline in the value of imports. Iron and steel sector (Ch: 72) exhibited significant growth of 23 percent in the collection due to 4.1 percent growth in its imports.
The auto sector (Ch: 87) also exhibited 12.3 percent growth in the collection of sales tax imports due to increased imports by 19.9 percent. Despite decline of 17.2 percent in the imports of electrical machinery, the collection of sales tax marginally improved.
The collection of mechanical machinery (Ch: 84) dropped by 6.3 percent mainly attributable to less imports by 20 percent. On the other hand, a sizeable growth of 83.7 percent in the sales tax collection from oilseeds (Ch: 12) was mainly due to 78.3 percent growth in its import.
About the sales tax collection on domestic consumption, the report highlighted that petroleum was the top revenue generator of sales tax domestic. The overall collection of sales tax depended on the collection of petroleum products as it contributes more than 40 percent. The collection of petroleum products reflected a low growth of only 1.1 percent during first half of 09-10 mainly due to reduced prices of petroleum products in the first half year as compared to the corresponding period last year.
The collection from telecom, second major source of sales tax domestic, declined by 11.1 percent. A robust growth of 41 percent was recorded in the collection of natural gas and its contribution in the overall sales tax domestic increased from 6.4 percent in first half 08-09 to 7.6 percent in first half of 09-10. This vibrant performance by natural gas was attributable to saving in payments of refunds of Rs 2.6 billion.
Another important source of ST (D) revenue was cigarettes, but collection increased only by 10.8 percent. Despite increase in the retail price of cigarettes, this growth seemed quite low. A huge growth of around 130 percent was evinced by services mainly due to shifting of banking and insurance services from FED to sales tax, coupled with increased rates from 10 percent to 16 percent.
A significant growth in the collection from electrical energy was visible, which was due to increased rates of electricity during the current July-December 2009 as compared to corresponding period last year. The collection from sugar exhibited growth of 21.3 percent mainly due to increased prices. It is encouraging that the ST (D) collection from tea grew by 48.6 percent over the collection of previous year. On the other hand, the collection on cement also improved by 41.8 percent, the report added.
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