ISLAMABAD, Aug 11: The government has raised maximum share of a few commodities in federal taxes and duties, sources during the year 2004-05, suggesting that the tax base was shrinking.
Official analysis, a copy of which was made available to Dawn showed that 69.3 per cent sales tax was raised from 10 commodities, 90 per cent federal excise duty collected from five items and 68.9 per cent customs duties came from only five commodities and 54.4 per cent share of income tax came from withholding tax during the year under review.
According to the analysis carried out by Member Fiscal Research and Statistics Dr. Attar Maqsood Ahmad, there are few commodities and sources, which contributed to collection of sales tax, federal excise, income tax at domestic stage.
According to the analysis, income tax collected through voluntary compliance stood at Rs73.9 billion (36.7 per cent), collection on demand Rs17.5 billion (8.7 per cent) and withholding tax Rs109.6 billion (54.4 per cent) during the year 2004-05. This showed that the income tax was heavily reliant on withholding tax collection.
Under the withholding tax collection, the major share came from contracts Rs33.4 billion (33.9 per cent), imports Rs24.5 billion (7.2 per cent), salaries Rs13.3 billion (11.9 per cent), exports Rs8 billion (22.6 per cent), telephone bills (33.6 per cent), electricity bills Rs5 billion (33.6 per cent). This showed that the share of 9 heads of withholding tax stood at 91.1 per cent.
The share of POL product including LPG in the domestic sales tax collection during the year 2004-05 stood at 16.7 pre cent, which was the highest during the year under review. It was followed by telecom services 13.6 per cent, electrical energy 10.5 per cent and natural gas 7.7 per cent.
This showed the four commodities contributed 48.5 per cent in the fiscal year 2004-05 as against 41.2 per cent in 2003-04. The other major sales tax spinners include textile, sugar, cigarettes, cement, iron and steel products, fertilizer, auto parts, aerated waters, motorcycles and cars, chemicals and plastic products.
The analysis showed that the inclusion of all these products with the four main products, the total share of all these products went up to 78.7 per cent in 2004-05 as against 77.1 per cent in 2003-04.
While at the same time, the collection of sales tax of many important items including cement, sugar and iron have alarmingly started declining during the fiscal year 2004-05 due to their shrinking tax base.
There are only five commodities—POL products, cigarettes, cement, natural gas and beverages, which generated 90 per cent of excise revenue. Of these, the share of cigarettes and cement in collection was 61 per cent during the year 2004-05.
Only five commodities contributed 68.9 per cent in the total customs duties collection in 2004-05. Of these the largest contributors in customs duties are automobiles, which contributed Rs22.2 billion (17 per cent), machinery Rs19.9 billion (15.2 per cent), edible oils Rs13 billion (9.9 per cent), chemicals Rs7.8 billion (5.9 per cent), iron and steel Rs6 billion (5.5 per cent).
The additional seven industries which contributed in customs duties included POL, plastics, textiles, paper and paper board, coffee and tea, rubber, tanning and colouring, pharmaceuticals and soaps and detergents.
All these statistics suggested that government needed to take measures for widening the tax base and to tap potential taxpayers under the tax net.
