The federal government is likely to fix a Rs2.346 trillion revenue collection target for next fiscal (2012-2013) against Rs1.952 trillion for 2011-2012 without any increase or decrease in the existing standard rate of 16 percent sales tax.
Sources told Business Recorder that the ministry of finance and Federal Board of Revenue (FBR) were working on budgetary proposals for next fiscal (2012-2013).
Policymakers, they said, had agreed not to change the standard rate of 16 percent sales tax in upcoming budget. One percent change in sales tax rate has annual revenue impact of Rs30 billion.
Initial revenue projections for 2012-2013 have been worked out at Rs2.346 trillion taking into account budgetary measures to be taken in the next fiscal. These are preliminary estimates, which could be revised in view of enforcement/administrative measures to be taken in 2012-2013.
“We are working on policy measures for direct and indirect taxes in the new financial year. We are yet to determine administrative and enforcement measures needed to be taken in the next fiscal. Depending on the cost of exemptions and administrative/enforcement measures, the final figure of revenue collection will be worked out by policymakers in consultation with the FBR,” sources added.
Meanwhile, a document of the finance ministry said that the revenue target was projected at Rs2.338 trillion (9.7 percent of GDP) for 2012-13 against the current year’s original and revised estimates of Rs1.952 trillion (9.3 percent of GDP). The consolidated tax ratio is likely to be raised from 10.4 per cent during the current year to 12 percent in the next three years. The tax-to-GDP ratio, estimated at 9.3 per cent for the current year, is likely to be increased to 10.3 percent over the next three years, it added.
At the time of budget 2011-2012, the board had announced administrative measures of Rs50 billion during the current fiscal. However, the net revenue effect of taxation and administrative measures was calculated at around Rs23 billion during 2011-2012.
Last year, the FBR provided relief worth Rs2.137 billion through tariff rationalisation. Sales tax and federal excise measures provided a relief of Rs52.35 billion. Sales tax and excise measures are estimated to generate Rs31.25 billion during 2012-2013. The net revenue impact of sales tax and federal excise was Rs -21.1 billion. The income tax measures provided relief of Rs3.8 billion during 2011-2012.
At the time of announcement of the budget for 2011-2012, taxation measures were estimated to generate Rs31.25 billion and relief measures totaled Rs58.287 billion, reflecting a net effect of Rs -27.037 billion in 2011-2012.
Source: Business Recorder