farhan_9909
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ISLAMABAD: The revenue collection target of Rs2,810 billion for the fiscal year 2014-15 is too ambitious, says a government report.
The projected increase of 24.3 per cent in tax collection target will largely be missed because historically the highest growth in tax collection that Pakistan has ever achieved was 22pc, said a report of the Pakistan Institute of Development Economics (PIDE) released here on Tuesday.
The over-projection of revenue collection target also has a cost in terms of transfer of money to provinces, but the government did not take into account this cost at the time of finalisation of budgetary projections.
Also read: Revenue, GDP growth targets missed
One problem in setting the ambitious tax collection target was that estimates of transfers under the NFC to provinces were based on tax collection budgeted at the federal level.
“The non-realisation of the federal government’s revenue target by a wide margin disturbs the provincial budget,” the report said.
Under the 7th NFC award, it was stipulated that Balochistan will receive its provincial share on the basis of the budgetary projections instead of actual collection of the Federal Board of Revenue (FBR).
Shortfall, if any, due to lesser collection by FBR was to be borne by the federal government. As a result of this law, an additional amount of Rs39bn has been transferred to Balochistan from 2010-11 to 2013-14 on account of shortfall in collections of the FBR with reference to the collection budgeted at the time of framing the budgets.
The problem of actual projection was not confined to revenue, but it was also reflective in other departments of the government. In fiscal year 2013, the PSDP of Rs2bn was allocated to the Cabinet Division, but the division spent as much as Rs21bn.
For the current fiscal year, a budget of Rs2bn has again been allocated for the Cabinet Division. This clearly suggests that more sophistication is required in developing the budget estimates.
Capital gains tax, corporate tax rate, excise duty on telecom sector and customs duty have been rationalised in the last budget. The flat rate capital gains tax on trading in securities has been replaced with a cascading structure, with those holding the securities for a longer period paying less.
The budget envisages various incentives for the textile industry, though the expected impact of GSP+ on the industry is yet to materialise. The poor state of energy supply must be constraining production, therefore, fresh incentives to textile industry, will partly add to the margins of the existing producers, if energy situation remains more or less unchanged during fiscal year 2015.
Collection of sales tax from small retailers through electricity bills, though commendable, has implementation challenges. This would require correct identification of retailers. For example, problems would emerge where electricity connection was not in the name of retailer operating the business.
Published in Dawn, September 24th, 2014
Rs2,810bn revenue target too ambitious: report - Newspaper - DAWN.COM
-----------------------------
-------------------------------
Perhaps will be most likely revised down to Rs 2600bn
The projected increase of 24.3 per cent in tax collection target will largely be missed because historically the highest growth in tax collection that Pakistan has ever achieved was 22pc, said a report of the Pakistan Institute of Development Economics (PIDE) released here on Tuesday.
The over-projection of revenue collection target also has a cost in terms of transfer of money to provinces, but the government did not take into account this cost at the time of finalisation of budgetary projections.
Also read: Revenue, GDP growth targets missed
One problem in setting the ambitious tax collection target was that estimates of transfers under the NFC to provinces were based on tax collection budgeted at the federal level.
“The non-realisation of the federal government’s revenue target by a wide margin disturbs the provincial budget,” the report said.
Under the 7th NFC award, it was stipulated that Balochistan will receive its provincial share on the basis of the budgetary projections instead of actual collection of the Federal Board of Revenue (FBR).
Shortfall, if any, due to lesser collection by FBR was to be borne by the federal government. As a result of this law, an additional amount of Rs39bn has been transferred to Balochistan from 2010-11 to 2013-14 on account of shortfall in collections of the FBR with reference to the collection budgeted at the time of framing the budgets.
The problem of actual projection was not confined to revenue, but it was also reflective in other departments of the government. In fiscal year 2013, the PSDP of Rs2bn was allocated to the Cabinet Division, but the division spent as much as Rs21bn.
For the current fiscal year, a budget of Rs2bn has again been allocated for the Cabinet Division. This clearly suggests that more sophistication is required in developing the budget estimates.
Capital gains tax, corporate tax rate, excise duty on telecom sector and customs duty have been rationalised in the last budget. The flat rate capital gains tax on trading in securities has been replaced with a cascading structure, with those holding the securities for a longer period paying less.
The budget envisages various incentives for the textile industry, though the expected impact of GSP+ on the industry is yet to materialise. The poor state of energy supply must be constraining production, therefore, fresh incentives to textile industry, will partly add to the margins of the existing producers, if energy situation remains more or less unchanged during fiscal year 2015.
Collection of sales tax from small retailers through electricity bills, though commendable, has implementation challenges. This would require correct identification of retailers. For example, problems would emerge where electricity connection was not in the name of retailer operating the business.
Published in Dawn, September 24th, 2014
Rs2,810bn revenue target too ambitious: report - Newspaper - DAWN.COM
-----------------------------
-------------------------------
Perhaps will be most likely revised down to Rs 2600bn
