Revenue Board and IMF discuss steps to improve tax collection

ISLAMABAD (December 06 2003): The tax managers and the International Monetary Fund (IMF) mission on Friday held introductory meeting to weigh measures for achieving revenue targets, official sources said.

The IMF mission and the CBR officials would start formal meeting on Saturday, which would continue up to December 11, officials added.

The IMF held preliminary meetings with top income tax manager Vakil Ahmed Khan, Member Tax Policy and Reforms M.S. Lal and Member Central Excise Naseer Ahmed.

Member Sales Tax Shahid Ahmed would hold a detailed session with the fund mission on December 6 to discuss revenue measures to increase the general sales tax (GST) collection during 2004-05, especially through tightening grip on service providers and trade.

Similarly, major revenue spinners will be combed for improving central excise duty (CED) collection on cigarettes, cement, POL products and natural gas for meeting revenue target during 2003-04.

The meetings would exclusively discuss the issue of tax collection in different heads and targets set for the current financial year.

The CBR would inform the mission that the authorities would take effective measures to increase CED from the cigarette industry, as leading cigarette manufacturing giants have deposited less excise duty, despite the assurances given by them.

The CBR officials would give comprehensive briefing to the fund members regarding measures being taken for achieving the annual target of fiscal 2003-04.

The collection of CED was Rs 15.601 billion during July-November 2003-04 as compared to Rs 16.384 billion collected during the corresponding period of the last fiscal.

The monthly collection of CED in November 2003 stood at Rs 2.730 billion against Rs 3.30 billion collected during the same period of the last fiscal.

In budget 2003-04, the CBR had abolished excise duty on paper and paperboard, wire and cable and other items and allowed adjustment of CED on paint and varnish, perfumery and cosmetics, soaps and detergents.

Excise duty on cement was curtailed from Rs 1,000 per tonne to Rs 750 per tonne.

The CBR would inform the fund managers that despite rationalisation of excise duty structure on cigarettes and withdrawal of the CED on certain items, the CBR was making efforts to chase monthly revenue targets fixed for the Central Excise Wing.

On the sales tax side, the IMF seemed satisfied with the ongoing efforts made by the department to enhance GST collection, improve audit capacity and expanding tax net.

For this purpose, the CBR is utilising the computerised information and tax profiles of the taxpayers.

The CBR has also developed new methodology to deal with the blacklisted units and discouraging people to claim bogus refund claims through flying/fake invoices.

The IMF has proposed to the CBR to repeal certain exemptions in the Sixth Schedule of the Sales Tax Act, 1990, including exemption on bricks, computer hardware/software and expand the scope of GST to all the services, including professionals.

The meeting with the income tax authorities would deal with the withdrawal of further exemptions.

The IMF review mission would continue to hold meetings with the CBR officials till December 11, covering all important issues, particularly steps to be taken for enhancing tax collection in the next budget 2004-05.

Other meetings would focus on end-December revenue target of the current fiscal, possible new tax exemptions, reform process and measures to generate extra revenue in 2004-05.

Recently, the executive board of the IMF completed the sixth and seventh reviews of Pakistan's economic performance under a three-year, SDR 1.034 billion (about $ 1.5 billion) Poverty Reduction and Growth Facility (PRGF) arrangement, and approved disbursements amounting to SDR 172.28 million (about $ 247.54 million).

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