PESHAWAR: Khyber Pakhtunkhwa government has decided to seek $100 million loan from the World Bank to help the provincial tax authorities overcome revenue collection shortfall.
The provincial tax collection machineries, including Excise and Taxation, Khyber Pakhtunkhwa Revenue Authority (KPRA) and Land Revenue Department, have never achieved the revenue targets since the devolution of Sales Tax on services component to the province in the wake of the 18th Amendment in 2010.
The Pakistan Tehreek-e-Insaf (PTI)-led government has estimated Rs45.22 billion as provincial own receipts in the current financial year (2017-18) and set the target of Rs18.84 billion for the first five months (July 1to December).
However, it could collect only Rs10.48 billion during the period facing a shortfall of Rs8.36 billion. The province has been collecting Sales Tax (ST) on services mainly from eight sectors with the Telecommunications as main contributor. The Telecom sector contributes 66 percent of the ST on services in the province. While four main sectors agriculture, mining and quarrying, manufacturing and electricity, gas and water are paying zero percent ST on services. However, the provincial government has succeeded in collecting ST on few other services.
The ST on services slab has, though increased steadily since 2013, yet it is still well behind the target set by the province against its potential.The aforesaid eight sectors contributed Rs5.9 billion in 2013-14, Rs7.2 billion in 2-15-16 and Rs10.2 billion in the last fiscal year (2016-17).
Going by its current standards, according to the World Bank analysis of the assumed annual growth, Khyber Pakhtunkhwa could collect just Rs12.9 billion ST in the current or next financial year. It will raise its ST on services collection to Rs49.75 billion in the fiscal year of 2029-30. However, the Bank experts assumed the potential of the province at around Rs174 billion for the period.
