According to newspaper reports, the large taxpayer unit of the Federal Board of Revenue has recorded a 20 percent decrease in collection of sales tax and federal excise duty from oil refineries during the first six months of the current fiscal year as compare to revenue collections in the same period of the last fiscal year.Reports also suggest that at least 15 percent reduction has been noticed in Islamabad and six percent in Karachi.
As a matter of fact, the large taxpayer units are the backbone of the economy and need special government attention in terms of incentives and facilitations. For instance in Japan, there are a few families which made investment in industry such as Toyota, Daihatsu, Toyo, Toshiba and some others which worked as engine for the economic growth of that country. The government provided full support to the investors and they enhanced their businesses from automobile to electronic goods, making and keeping Japan as the second largest economy of the world for years until China took over the title. Japan had even left behind the colonial and economic powers like Britain, France and Germany far behind in economic performance. The second example is of Scandinavian countries the people of which used to work in other countries. But only a few families in Norway made investment and boost the economy not only of Norway, but also of the entire region. Investors need protection of their capital and protection of their business interests. Any scary government move lead to the capital flight as it happened in the case of Pakistan due to imprudent policies made by some members of the myopic bureaucratic machinery.
The latest example of foreign investment is Dubai which has little oil, but great mind power. Its rulers have used their mind and a tiny state is the hub of business in the region.
The revenue collection of three top sectors of the large taxpayer units showed a declinein the oil refineries during the period. The percentage-wise share of oil refineries in sales tax and federal excise duty is 24 percent in Karachi, 49 percent in Lahore and 13 percent in Islamabad during July-February (2014-15). The decline is mostly attributed to the steep fall in the oil prices in the international market.
What the government needs to do it to provide tax relief to the large, medium and small entrepreneurs to enhance tax revenue. The thrust should be to enhance tax net and not on to squeeze the ones who are already paying taxes in different categories.
