Central Board of Revenue (CBR) Chairman Abdullah Yusuf on Wednesday said that there has been 28 percent mismatch between the ways various sectors contribute towards GDP and taxes. Addressing the fifth anniversary gathering of Large Taxpayers Unit (LTU) Karachi, he said that this huge tax gap should be narrowed to achieve current fiscal year''s revenue collection target of Rs 1.025 trillion.
He said that oil and gas, banking and telecom sectors were the leading performers in revenue collection during last fiscal year but various other sectors did not contribute to revenue collection as per their existing potential.
He said that retailers and wholesalers were contributing 16 percent to the GDP but their contribution in tax collection was less than 3 percent. Similarly, transporters were contributing 12 percent to the GDP, but they were paying only 4 percent to taxes.He said that the CBR achieved a milestone by surpassing Rs 835 billion mark during 2006-07, with the growth rate of 17.5 percent. He said that the board has aimed at collecting over Rs 4 trillion revenue by 2016 with the continuous growth of 22 percent.
He said that the current tax-to-GDP ratio of 10.5 percent would be increased to 15 percent in the next 10 years with annual addition of 0.3 to 0.5 percent. Yusuf said that after initiating the reform policy the CBR has changed the entire tax collection scenario. In the current system the taxpayers have been given authority to assess their income and contribute to national kitty.
He appreciated the performance of Karachi LTU by collecting Rs 135 billion in 2006-07, and praised the DG LTU and his team for their outstanding performance.
He said that in the reform program three LTUs were planned and two of them were functional, and one in Islamabad would be operational in next three months. He said that about 13 Regional Tax Offices (RTOs) across the country would be functional by the end of this year.
On the occasion, DG LTU Mukhtar Ahmed Gondal said that the LTU was inaugurated on July 1, 2002 as the first model unit of tax reforms. The unit started with 298 recognised and selected large taxpayers from direct taxes and 321 from the indirect taxes for preferential treatment under the reform programme, he said, and added that the income taxpayers population was subsequently increased to 639.
He said that workforce also increased from 53 officers and 128 staff members to 93 officers and 160 staff members with a ratio of 1 to 2. He said that direct taxes growth has been 228 percent from tax year 2003 with an average of 20 percent in the first four years and 95 percent during 2006-07. Similarly, sales tax registered growth of 3 percent and federal excise at the rate of 35 percent.The unit also initiated several IT related projects regarding e-filing, e-payment and e-refunds, he said.