According to newspaper reports, the tax authorities collected Rs 1,191 billion on account of direct taxes during fiscal year 2015-16, which is 38.27 percent of the total revenue collection of Rs 3,112 billion. The ratio of direct tax collection remained 39.91 percent of the total revenue collection of Rs 2,589.9 billion during the fiscal year 2014-15.The ratio of the federal excise duty has also decline from 6.26 percent to 6.12 percent during the period. At least 1.64 percent decline in the ratio of direct taxes indicates the government is heavily relying on indirect taxes which requires serious policy not only to enhance tax net, but also to increase the ratio of direct taxes. The authorities collected Rs 1,323 billion as sales tax during fiscal year 2015-16 which is 42.53 percent of the total collection of Rs 3,112 billion. The sales tax collection during the fiscal year 2014-15 was Rs 1,087 billion or 42 percent of the total tax collection of Rs 2,589.9 billion.
The government received Rs406.2 billion or 13.05 percent of the total revenue collection of Rs 3,112 billion under the head of customs duty during the fiscal year 2015-16 against Rs 306 billion or 13.05 percent it collected under the same head during 2014-15.The total collection under the head of federal excise duty was Rs190 billion in 2015-16 or 6.12 percent of the total revenue collection of Rs 3,112 billion as compared to Rs 162.5 billion or 6.26 percent in total revenue collection of Rs 2,589.9 billion. As the ratio of direct taxes and federal excise duty has been declining, the sales tax collections and customs duty in terms of percentage are increasing, severely affecting the purchasing power of the common man. The official figures indicate that sales tax collections in terms of percentage have increased to 42.53 percent of the total revenue collection during 2015-16 from 42 percent in 2014-15 and collections under the head of customs duty have increased to 13.05 percent from 11.82 percent during one year.
It is good omen that tax to GDP ratio has increased to 10.5 percent from 9.4 percent in fiscal year 2015-16 which shows marked improvement in the revenue collections. The authorities have fixed ambitious tax collection target of Rs 3,621 billion for fiscal year 2016-17, which will be almost 16.4 percent of the previous year’s collections. The country’s economy is improving but the ideal growth is still a dream. There is a need to give incentives to the business community if the government wants to enhance its revenues. The businessmen will only be able to pay if they earn and it should be kept in mind while devising tax policies.
