Tax growth

651

TAX collection in the first six months of current fiscal year stood at Rs 2,083 billion, 16.3% higher than the collections made during the same period last year. In fact, it is the highest growth rate since 2015-16, for which the government’s economic team, especially Chairman FBR Shabbar Zaidi, really deserves appreciation as the tax collection body has to make great efforts to attain this growth despite rather subdued economic activity.
It is the first time that a serious and sustained effort has been started to bring the potential sectors into the tax-net and the good thing is that despite opposition and protests by the business community, the government is sticking to its plan of documentation of economy and also engaging with the businessmen to allay their concerns. With the same objective it has come up with the Tax Amendment Ordinance to accommodate reasonable demands of traders. Since CNIC disclosure of every sale is a major requirement of law now, the traders were rightfully demanding a decrease in minimum tax rate as majority of taxpayers were earlier paying the minimum tax on grossly suppressed sales. In view to encourage correct declarations, the rate of minimum tax has been rationalized under the ordinance. Indeed this carrot and stick policy is the way forward to broaden the tax base and achieve the challenging tax collection target of Rs 5.55 trillion. Whilst 16.3% growth in tax collection is encouraging but we are confident that the tax collection body will be cautious of the fact that collections remained behind the target by Rs 114 mainly because of decline in imports. The focus of tax dependence on imports must be shifted if we really want to successfully reduce current account deficit whilst focusing on bolstering exports. Since greater economic activity is being anticipated in the next six months, the FBR should make all out efforts to reach close to the collection target set for the current fiscal year by going after the tax evaders. Whilst all the potential sectors should honestly pay taxes as it is the only course to put the country on the path of self reliance, the government must also consider reducing the tax rates especially the GST to provide relief to the people.