ISLAMABAD, July 7: The collection of sales tax on many important items including cement, sugar and iron has declined during the fiscal year 2004-05 due to its shrinking tax base.

Official figures available with Dawn showed that due to this declining trend and some other factors, the CBR had revised down the sales tax collection target to Rs239.2 billion for 2004-05, from the budgetary target of Rs249.1 billion.

The other reason for bringing down the target was low realization of sales tax from the cigarettes industry and overall 21.4 per cent reduction in sales tax realization from small commodities.

The analysis of the 10 major revenue spinners showed that collection of sales tax from sugar had declined by 2.7pc to Rs8bn during the year 2004-05 compared to Rs8.2bn the previous year.

The ST collection from cement declined by 15.3 per cent during the year under review to Rs3.8 billion as against Rs4.4 billion in the previous year, while collection from iron and steel fell by 5.5 per cent to Rs3.3 billion as against Rs3.5 billion of last year.

The CBR should launch a drive to raise maximum amount of sales tax from 368 cement, steel and sugar industries against their actual production during the fiscal 2004-05. Around 33 cement industries, 261 steel units and 74 sugar mills across the country filed sales tax returns during the year.

On the other hand, the production of cement, sugar and steel units had shown a tremendous growth during 2004-05, but the collection of sales tax had declined as compared to the previous year.

Interestingly, the CBR has raised 69.3 per cent sales tax from the 10 major revenue spinners out of the total sales tax collected on all products at domestic stage during 2004-05, suggesting that the sales tax base was shrinking.

In absolute term, the collection of sales tax from these 10 products registered an overall growth of 20.9 per cent to Rs103.7 billion during 2004-05 as against Rs85.8 billion the previous year. While the collection of sales tax from the other commodities has declined by 21.4 per cent to Rs45.8 billion against Rs58.8 billion collected in 2003-04.

The CBR raised Rs22.7 billion under sales tax from POL products during the 2004-05 as against Rs21.8bn in the previous year, indicating a growth of 4.2 per cent; Rs20.4bn from services of telecom sector as against Rs12.1 billion, a growth of 68.3 per cent; Rs15.6bn from electricity energy as against Rs13.7 billion, showing an increase of 13.7 per cent; Rs11.4bn from natural gas as against Rs10.6bn, an increase of 7.5 per cent; Rs9.1bn from cotton yarn as against Rs2.6 billion, an increase of 246.5 billion.

The tax officials raised Rs5.9 billion as sales tax during 2004-05 as against Rs5.4 billion, an increase of 10.7pc and Rs3.4 billion from services.