Short-term action plan: FBR to fix minimum sale prices of 10 ST evasion-prone items

The Federal Board of Revenue (FBR) has decided to fix minimum sale price of 10 major retail items, prone to sales tax evasion, for improving domestic sales tax collection under a short-term action plan, which is likely to bring in Rs 1,112 billion for January-June period of 2011-12 fiscal year to meet annual target of Rs 1952 billion.
Sources told Business Recorder here on Wednesday that the FBR has drafted a new plan to ensure at least 24 percent growth in revenue collection figures during second half of 2011-12. Besides administrative/enforcement measures, the FBR has proposed new procedural and legal action to improve tax collection in the second half of 2011-12. One of the new measures is to fix minimum price, or value, of the items prone to sales tax evasion. The fixation of minimum value, or price, of any commodity would ensure sales tax collection on the fixed value and at least revenue would start coming from major items prone to sales tax evasion.
Secondly, the fixation of minimum sale price of 10 items would suddenly improve domestic sales tax collection from these sectors which at present are contributing nothing or very negligible amount towards the sales tax. According to the short-term revenue collection plan for January-June 2011-12, to stop the sales tax evasion due to the under-pricing of various domestic goods, Director General Intelligence and Investigation (I&I), FBR and Member (Admn), FBR shall prepare a proposal in consultation with FBR Member Inland Revenue (IR) for valuation and thereon inclusion of above 10 major evasion-prone items in the existing list of items minimum pricing at the retail level.
Sources said that FBR Chairman Salman Siddique has informed the tax managers that the FBR has achieved the first six monthly revenue collection target of Rs 840.7 billion for the period of July--December, 2011, showing 27 percent growth over the collection of Rs 661 billion for the corresponding period of July-December, 2010. The FBR has also quantified various factors contributing directly and indirectly to the revenue collection process and quantum. The FBR Chairman, though, expressed satisfaction over the performance, yet stressed more upon concerns for the upcoming uphill target of Rs 1112 billion for the period of January-June, 2012, requiring 24 percent growth over the revenue of Rs 896.2 billion collected during the corresponding period of January-June, 2012. FBR Member Strategic Planning and Statistics (SP&S) presented a projection of Rs 1112 billion for second half of 2011-12 on the basis of all possible contributing factors. The FBR also discussed various options and workable strategies to ensure viability of the target before finalisation of short-term revenue collection plan.
The Board discussed the matter in detail with FBR Members and the following revenue collection plan for Jan-June 2011-12 has been approved: The FBR will immediately take administrative tax measures for the revenue col1ection target of January-June, 2012.
Under the revenue collection plan (January-June 2012), the audit of withholding agents is to be conducted with optimum skillfulness to recover the due revenue. All Chief Commissioners are to report on the subject through standardised pro forma to be developed by Member (IR). Secondly, the cases pending at various appellate courts are to be pursued vigorously to enable the recovery of stuck up arrears.
Thirdly, all Chief Commissioners and Directorate General Intelligence and Investigation Inland Revenue (IR) have to concentrate more on the preclusion of claiming illegal sales tax input adjustments and to discover and recover the said inputs if already claimed by the taxpayers. Fourthly, D.G (I&I), FBR, D.G Withholding and D.G Valuation would take appropriate measures to improve revenue collection by plugging loopholes through enforcement and compliance by the potential sectors.
Fifthly, for declaring taxpayers for Large Taxpayers Units as withholding agents for the purposes of withholding sales tax, the FBR Member IR and FBR Member (Admn) would prepare a proposal for presentation before the Board. Sixthly, the broadening of tax base exercise is to be taken up on much speedy pace for achieving the targets both in terms of the number of taxpayers and the collection of due taxes, short-term revenue collection plan added.