The Federal Board of Revenue (FBR) has provisionally collected Rs 24 billion up to August 16 as compared to Rs 26 billion collected in the corresponding period of last fiscal year, reflecting that devastating floods have negatively impacted revenue collection machinery. Sources told Business Recorder here on Tuesday that the flood in the country has gradually started squeezing the overall revenue collection during August.
There is a decrease of 9 percent in monthly revenue collection up to August 16 as compared to the same period last fiscal. The board has provisionally collected Rs 24 billion up to August 16 as compared to the target of Rs 102.4 billion set for August 2010. It would be almost an impossible task for the tax machinery to achieve ambitious target of Rs 102.4 billion during the period under review.
The 20 percent of the total revenue collection target has to be achieved during the first quarter (July-September) of 2010-11. The FBR had fixed Rs 335.9 billion as revenue collection target for first quarter (July-September) of 2010-11. Out of Rs 335.9 billion, the monthly target for July 2010 had been fixed at Rs 90.1 billion; Rs 102.4 billion for August and Rs 143.4 billion has been set for September 2010.
Sources said that the government has suffered revenue loss in billions due to floods and suspension of business activities in Karachi during first week of August. According to rough estimates, the FBR is suffering a loss of approximately Rs 4-5 billion per day and one-week loss comes to around Rs 30-35 billion in terms of revenue. During first week of August, customs clearances at Khyber Pakhtunkhwa were totally blocked whereas clearance of imported goods from dry ports in Punjab was very slow due to floods. The FBR had also suffered huge revenue loss on daily basis due to un-cleared imported consignments at Karachi Port during the said period. About the sales tax collection, sources said that if the imported raw materials and inputs have not reached the manufacturing premises, it would affect the finished products output. Secondly, if local production has not taken place despite availability of raw materials, it would also have negative impact on sales tax.
Sources said that the floods would also have long-term negative impact on revenue collection following damage to roads, bridges, infrastructure and suspension of supplies. On the sales tax side, the collection of sales tax on domestic consumption and supplies would witness decrease following damage to the roads/bridges. When the movement of trucks and bonded carriers would not take place, it would have impact on the supply of commodities/equipment to the markets, negatively impacting income tax as well as sales tax collection.