Revenue generation likely to improve

ISLAMABAD: Revenue generation in the second half of current fiscal is likely to improve due to increase in utility prices and collection of additional income tax as a result of increase in salary of armed forces personnel.

The improvement in revenue generation could offset the low collection in the first six months of the fiscal, an official of the finance ministry said.

The ministry of finance is finalising a working paper detailing the low revenue generation for presentation to the International Monetary Fund.

The paper will also highlight the methods adopted by the authorities to achieve the revenue generation target of Rs1.38 trillion by June.

The next meeting between Pakistani and IMF officials is scheduled to be held in Dubai on Feb 12. The meeting is expected to focus on resource mobilisation in the July-January period of the ongoing fiscal year.

Tax officials have informed the finance ministry that a decline of Rs7 billion is expected because of the following reasons:

--- General sales tax exemption on sugar;

--- Collection from cigarette industry remaining Rs3 billion less than the expected amount, and;

--- Low revenue collection from the Capital Value Tax on transfer of immoveable properties.

“This was mainly due to the lacklustre economic activity in the real estate sector,” the official said.

However, he added that the authorities were hopeful of achieving the target in view of the expected increase in revenue collection from the salary of armed forces personnel which had been enhanced in January.

“An additional income tax of Rs4 billion is expected from this head in the remaining six months of the fiscal,” Chairman of the Federal Board of Revenue Sohail Ahmed said. Expected hike in gas and electricity tariff would also boost revenue collection.

He said that in January, the FBR’s provisional tax collection was Rs111 billion and the final figures were expected to reach Rs115 billion against the target of Rs124 billion.

However, he said the two instalments of advance tax that were due by June would help bridge the existing shortfall and revenue collection would be in line with the target.

Mr Ahmed said the government had decided not to impose new taxes in the ongoing quarter fiscal in order to improve collections.

However, if found necessary additional revenue measures would be taken in the last quarter (April-June) of the fiscal.