No new tax or increase in tax rate in fiscal year 2013 budget: FBR chairman tells National Assembly body

Chairman Federal Board of Revenue (FBR) Mumtaz Haider Rizvi on Thursday informed the National Assembly Standing Committee on Finance that the federal budget (2012-13) would not impose any new tax or increase the rate of tax, as new budget would be growth-oriented to be focused on simplification of tax systems, cleansing of the statutory regulatory orders (SROs) and phasing out of federal excise duties.
Briefing the NA Standing Committee of Finance on FBR''s performance here on Thursday, Mumtaz Haider Rizvi said that the no new tax would be imposed in next budget. Moreover, there would be no increase in tax rates. The budget would focus on the government policy on moving towards three taxes ie income tax, sales tax and customs duty. In this regard, gradual phasing out of FED would be done.
The FBR will continue to take steps to move towards documentation of the economy and broadening the tax base in new fiscal. The growth-oriented budget would give priority to employment, industrialisation and investment. The objective of the simplification of taxes would be achieved through transparent, consistent, predictable systems.
FBR Chairman said that last year the FBR has rescinded more than half of the SROs. During the last five years, hundreds of SROs of sales tax and customs duty have been rescinded. The exercise of cleansing of the SROs and tariff rationalisation would continue in the next budget. In last budget, raw materials, components and sub-components of 156 different industrial sectors were allowed concessions/exemptions from customs duty under SRO 565(1)/2006.
FBR Chairman was confident that the FBR has been able to maintain growth of 27 percent despite current economic situation of the country. The credit should be given to the tax machinery for achieving such a remarkable growth of 27 percent despite slowdown in economy. At present the FBR is ahead of target which is a major achievement of the tax authorities under current circumstances.
The unprecedented growth in revenue collection and amassing the revenue collection target during 2011-12 showed commitment of the tax machinery to achieve the ambitious target of Rs 1,952 billion by the end of current fiscal. Even if we manage to maintain growth of 25 percent the FBR would be able to cross the psychological barrier of Rs 1,952 billion.
Expressing satisfaction over the current pace of revenue collection, he said that the FBR has provisionally collected Rs 131.5 billion during the month of February 2012. However, these are provisional figures which are expected to be increased in coming days on compilation of final data.
Sharing data of July-January (2011-12), Mumtaz Haider Rizvi was happy to announce that the FBR has shown remarkable growth of 27 percent during first seven months of current fiscal. Against the budgeted target of Rs 770 billion for July-January (2011-12), the actual revenue collection stood at Rs 975 billion during this period. The required growth during February to June 2011-12 would be 24 percent as compared to the existing growth of 27 percent. The FBR has to collect Rs 977 billion in the remaining months of current fiscal which require growth of 24 percent during February-June 2011-12. Besides sales tax growth at the import stage, the satisfactory position of revenue collection in 2011-12 is also due to administrative and enforcement measures taken by the Board from time to time.
FBR Chairman said that the direct taxes collection stood at Rs 351 billion during July-January (2011-12) against Rs 278 billion in the same period last fiscal, reflecting an increase of 26 percent. Sales tax on services collected by Sindh in 2011-12 was Rs 12.15 billion during July-January 2011-12. This amount of Rs 12.15 billion was not part of the revenue collection of the FBR. However, this amount was included in the budgetary projections of Rs 1952 billion for 2011-12.
Sales tax collection was Rs 445 billion against Rs 329 billion, showing an increase of 35 percent. The withdrawal of sales tax zero-rating facility at the local stage for five zero-rated sectors and imposition of sales tax on plant, machinery and equipments and withdrawal of sales tax exemptions through the SROs has improved sales tax collection during 2011-12. Another major factor responsible for increasing in sales tax collection is the raise in the prices of importable items which also subsequently increased the incidence of sales tax at the import stage.
He said that the collection of federal excise duty (FED) was Rs 68 billion during the period under review against Rs 68 billion in the corresponding period of last fiscal. The customs duty collection was Rs 111 billion during July-January (2011-12) against Rs 95 billion in the same period last fiscal, reflecting an increase of 17 percent.
So far, the FBR has been able to collect over Rs 41 billion with the help of administrative and enforcement efforts at the level of the field formations. During July-January (2011-2012), the FBR has recovered an amount of Rs 7 billion from audit of withholding tax agents. The current demand has been raised to the tune of Rs 8 billion during this period. The exercise of broadening the tax-base has resulted in collection of Rs 1 billion. The improvement in collection through proper regulation of the Afghan Transit Trade has improved collection of Rs 6 billion. The recovery of Rs 1 billion has been made from illegal input tax adjustments. The FBR has been able to recover Rs 5 billion from income tax surcharge during this period. The improved valuation of imports resulted in collection of Rs 3 billion whereas improved appraisement of imports through WEBOC has realised revenue of Rs 1 billion. The recovery of arrears has been able to help the tax department to generate an additional amount of Rs 9 billion.
The FBR is targeting to collect Rs 50 billion from the administrative and enforcement actions during February-June (2011-12). Out of this amount, the broadening the tax base (BTB) campaign would help in collection of Rs 5 billion, recovery of illegal input tax adjustments Rs 10 billion, withholding audit Rs 22 billion, stuck-up arrears Rs 8 billion and additional revenue of Rs 5 billion is expected from administrative and enforcement actions on the customs side in the remaining period of current fiscal.