Revenue collection: FBR facing challenge to maintain higher growth of 26-27pc

The Federal Board of Revenue (FBR) is facing an uphill task to maintain current momentum of higher growth of 26-27 percent from March 15, 2012 onwards as taxation measures taken in March 2011 would now become comparable in real terms in the remaining period of three and a half months of 2011-2012.
Sources told Business Recorder here on Sunday that the taxation measures taken in March 2011 included withdrawal of sales tax exemptions on fertilisers, pesticides, plant, machinery and equipment including its parts. In March 2011, the Board has also withdrawn sales tax zero-rating facility on domestic supplies of five leading export sectors. When these taxation measures were introduced in March 2011, the same played an important role for increasing growth in revenue collection from March 2011 and onwards and growth in revenue collection was visible.
At the same time, as measures were taken in March 2011, its impact cannot be compared with the corresponding period of previous fiscal. The withdrawal of exemptions was done in March 2011 and growth was witnessed due to these measures without making any comparison with the corresponding period of last fiscal, as such comparison cannot be made. For example, if sales tax has started coming from fertilizers/pesticides from March 2011 during current fiscal, how the growth in sales tax from fertilizers/pesticides could be compared with the previous period when sales tax from these sectors was not coming. The collection of sales tax from plant/machinery started coming from March 2011 and how growth in collection is comparable with the past period when sales tax cannot be collected from plant/ machinery.
The measures taken in March 2011 would now become neutralised in March 2012. Hence the corresponding period of March 2011 and March 2012 onwards would now become comparable in real sense.
It would be a big challenge for the tax machinery to maintain current momentum of higher growth in revenue collection when the revenue collection from the measures taken in March 2011 would be comparable with the period of March 2012 and onwards.
Sources further said that the negative impact may be seen in March 2012 as there is no income tax surcharge which was available in last March 2011 and the revenue growth from the taxation measures taken in March 2011 would now be actually compared with the collection from March 15 2012 onwards.
The tax machinery has to make extraordinary measures for generating additional revenue from administrative and enforcement measures as a result of the March 2011 measures could easily be compared with the actual growth from these measures from March 2012. It has been observed that the FBR's high-ups particularly FBR Chairman Mumtaz Haider Rizvi and FBR Member Inland Revenue Shahid Hussain Asad are sitting late nights every day in order to monitor daily revenue collection of the Large Taxpayer Units and Regional Tax Offices and timely guide field formations on all relevant issues. Tax authorities are daily monitoring the progress of the field formations to check collection from enforcement and administrative measures on daily basis. This is for the first time that the FBR House remained opened till late night to work on war footings to ensure achievement of revenue collection target of Rs 1952 billion by the end of 2011-12.