Sales tax collection from sugar on domestic consumption falls

The sales tax collection from sugar on domestic consumption has shown major shortfall of 57.5 percent during the first half of 2010-2011 as compared to the same period of last fiscal, says FBR quarterly review issued on Thursday. According to the FBR analysis of sales tax, the petroleum is the top revenue generation source of sales tax domestic with 45 percent contribution in overall sales tax domestic collection during the first half of 2010-2011.
The collection of petroleum products grew by 13 percent during the first half of 2010-2011 mainly due to 7.2 percent growth in its taxable sales. The collection from telecom sector, the second major source of sales tax domestic, has improved by 8 percent due to increased usage of the telecom services by 9.2 percent. Similarly, the growth in revenue from natural gas is restricted to 7.6 percent mainly due to payment of Rs 1.9 billion higher refund during the same period.
The collection of services recorded a growth of around 24 percent mainly due to improved collection from banking and insurance services. The collection from electrical energy grew marginally. The low growth in the collection from electrical energy is mainly due to Rs 2.5 billion higher payment.
Sales tax domestic contributed around half of total sales tax collection during July-December, 2010-11. The share of major ten commodities has come down to 92.6 percent in first half of 2009-10 from 89.3 percent in first half of current fiscal mainly due to improvement in the shares of petroleum products. The collection from cigarettes grew by 12.4 percent. This is partly due to increased taxable sales by 8.4 percent and lower input/out ratio during July-December, 2010-11 as compared to corresponding period last year. Similarly, the collection from beverages has grown strongly by 25.1 percent due to increased taxable sales by 30.9 percent and low input out ratio during first half of 2010-11 as compared to corresponding period last year.
A growth of 47.1 percent was reflected in the collection from tea as its taxable sales have gone up by 31.5 percent. On the contrary, collection from sugar has recorded negative growth of 57.5 percent attributable due to higher input-output ratio of 38.3 percent during this period against 12.1 percent of the same period last fiscal. Moreover, a decline of 3 percent has been recorded in the production of sugar during the period under review. Similarly, the collection of cement has also declined by 31.2 percent due to higher input-out ratio of 87 percent during July-December, 2010-11 as compared to 80.3 percent in the corresponding period last year. The production of cement has come down by 10.1 percent during first half of 2010-11 as compared to corresponding period last year, the report said.
The report said that ten major revenue spinners contributed around 81.1 percent of the sales tax import collection during July-December 2010-11. It is encouraging that all the 10 major revenue spinners have recorded double digit growths in the collection of sales tax during the period under review.
The report said that edible oil is the second most prolific revenue source of sales tax on imports during this period. The growth of 60.4 percent has been recorded in the collection from this item during July-December, 2010-11 as compared to corresponding period last year. This robust growth is achieved due to 70.3 percent growth in its imports.
The collection from imports of plastic grew by 31.5 percent, which is in line with the growth of 31.2 percent recorded in its imports. The auto sector has also exhibited 36.8 percent growth in the collection due to increase in its 15.4 percent in its import. The electrical machinery and mechanical machinery improved their collection by more than 24 percent. Iron and steel sector has exhibited significant growth of 21.9 percent in the collection due to 22.3 percent growth in its imports. Similarly, organic chemical and oilseeds recorded double digits growths in the collection by 10.8 percent and 28 percent mainly due to 9.7 percent and 18.8 percent growths in their imports respectively, FBR report added.