ISLAMABAD: The strenuous efforts of the Federal Board of Revenue (FBR) have reduced the share of customs duty in federal tax receipts from 19 percent to 13 percent during the last decade (from 2005-6 to 2015-16).
In this regard, FBR adopted special measures and initiatives including tariff rationalization and brought down maximum duty slabs in a bid to reduce the burden of indirect taxation.
“Similarly, in the same period, the share of direct taxes has increased from 32 percent to 39 percent, indicating a shift towards direct taxation,” Source at the FBR told Customs Today. They said that during the last two financial years the major thrust of the policy and administrative measures of the FBR was to place more reliance on direct taxes.
Moreover, the source said that the rates of customs duty used to be very high in the past. In 1987-88, the maximum statutory rate of customs duty was 125%. Over the years, however, duty rates have been gradually reduced.
“This has resulted in positively because the tax evasion in connivance with customs officials has reduced because importers and exporters have changed their attitude towards the CD due to reduced rates” the source added
In 2013-14, the source said that FBR decided to reduce the slabs of customs duty from seven to four and the highest slab was brought down from 30% to 20% in the next three years. Accordingly duty slabs have been reduced to four, i.e. 3%, 11%, 16% and 20% in the budget 2016-17, with the highest of 20%.
Similarly, in budget 2016-17, the source said that the share of customs duty in budgetary revenue measures was only Rs.11.4 billion out of total more than Rs. 148 billion, indicating greater stress of the government on reducing the share of indirect taxes in the overall revenue receipts.
