ISLAMABAD, May 8: The voluntary compliance under the head of direct taxes is likely to aggravate as income and corporate taxes will be operating under the universal self assessment scheme from July 2003.

Official sources told Dawn on Wednesday that to mitigate the apprehensions, the tax authorities are considering a series of measures for full implementation from the next financial year.

These measures would include an effective mechanism of audit and a regime of penalties to be strictly enforced with an aim to encourage voluntary payment of taxes.

According to official statistics available with Dawn the voluntary payment increased by over 40 per cent during the first quarter of the current fiscal over the same period of last year. But it declined by 22.9 per cent and 14.4 per cent respectively during the second and third quarters over the year-ago periods.

The overall decline in voluntary compliance during the first three quarters has been 11.4 per cent.

This decrease could, in part, be attributed to substantial decline in individual and corporate earnings during the financial year 2001-02 due to a global slowdown of the economies after 9/11, said the officials.

After a dismal position during the previous financial year, the collection through withholding tax has also started to increase on quarter to quarter basis. From 5.2 per cent and 8.5 per cent growth seen in first and second quarters of the current fiscal, collection through withholding tax increased by 9.3 per cent in the third quarter over the same period of last year.

Hence a cumulative growth of 7.7 per cent during the first nine months of this fiscal year.

Official data shows that the advance tax collection increased from Rs16.6 billion in financial year 1997-98 to Rs35.6 billion in 2001-02 witnessing a cumulative growth of 114 per cent.

This has resulted from collection worth Rs8 billion made from large public sector companies, especially PTCL, OGDC, PSO and Sui Southern Gas Company. While it is encouraging that advance tax collection has risen consistently over the past few years, the disadvantage of this phenomenon is that refund claims and repayment have also risen consequently, added the officials.