ISLAMABAD: Share of voluntary payments in the total direct tax collection reflect that efforts made by the Federal Board of Revenue (FBR) to persuade taxpayers for filing their returns and steps taken for broadening tax base have started to produce results.
Sources at the FBR, sharing data of revenue collection along with increasing trend with Customs Today, said that voluntary payments recorded a growth of around 10 percent and stood at Rs 288 billion as compared with Rs 263 billion last year.
Main contribution in the voluntary payments was in advance tax, which grew by 8% and recorded at Rs270 billion in previous fiscal year. However, the share of voluntary payments represented 26% of the total direct tax collection in last financial year compared with its share of 28% in 2013-14. Payment with returns also grew by 30% in last fiscal year.
The source shared that an analysis of the last two decades of fiscal performance revealed that high subsidies remained a major burden on fiscal account combined with falling tax to GDP ratio. Interestingly, even during the period of fiscal improvement (1999- 2004), tax to GDP ratio continued to decline.
Tax revenue as percentage of GDP stood at an average of 13.7% during 1992-96, decreased to an average of 9.7 % during 2008-2013. Low tax to GDP ratio has also translated into falling total revenue to GDP ratio as it decreased from an average of 18% during 1992-96 to 13.4% during 2008-13.
However, the source said that the fiscal performance improved considerably during last two years, both in terms of revenue mobilization and expenditure management. Going forward, both spending and revenue measures have important implications for the economy and these need to be taken into account if the ongoing fiscal consolidation efforts are to be sustainable.
The tax collection target of Rs2,810 billion set for last fiscal year was challenging due to multifaceted issues like energy crisis and law and order situation” the source added saying that target was set assuming FBR revenue collection at Rs2,275 billion during 2013-14 which was based on projected growth in GDP, inflation, tax buoyancy and other major economic indicators.
However, the source added that tax collection fell short by Rs21 billion against the budget target and stood at Rs2,254 billion in 2013-14, resulting in a revised target of Rs2,605 billion for 2014-15. Therefore, FBR tax to GDP ratio improved to 9.5% in 2014-15 from 8.9% last year owing to improved tax collection.
