ISLAMABAD: The government has assured the International Monetary Fund (IMF) that it will record 17 per cent growth in the collection of federal taxes in the last quarter of 2016-17, a senior official told Dawn on Friday.
The assurance came at the conclusion of Article IV consultations with the IMF team in Dubai in which the Fund reviewed major economic indicators of the country.
The IMF was informed that the fiscal deficit was up mainly because the impact of rising international oil prices was not passed on to consumers. “We have suffered Rs120 billion shortfall in the revenue collection from the oil sector,” the official said, adding that taxing petroleum products is the easiest way of collecting revenue.
The IMF was informed that last year’s policy measures led to the low revenue collection. Lowering duty rates on fertilisers resulted in a shortfall of Rs48bn while zero-rating for five sectors cost the exchequer Rs39bn.
The impact of these policy measures is estimated to be around Rs230bn for the fiscal year. “We cannot increase tax rates to meet the shortfall in the remaining three months,” the official said.
The government has set the revenue collection target of Rs3,620.8bn for 2016-17.
The export package will have a negative impact of Rs10bn on the revenue collection in the current fiscal year, the official said.
“We have shared our plan of action, which is focused on nonconventional methods, with the IMF to raise revenue in the last quarter,” the official said, adding that the Fund has agreed to the steps being taken to grow revenues.
According to the official, the IMF was comfortable with the revenue collection during the review period.
The government is also planning to constitute alternative dispute resolution committees to resolve revenue cases stuck in court. “We are expecting to realise maximum revenue through this process,” the official said.
Exporters are going to meet Federal Board of Revenue (FBR) officials on Tuesday to resolve the issue of outstanding refunds. It is estimated that refunds to the tune of Rs40bn from the five sectors have piled up with the FBR although the government has done away with zero-rating.
Zero-rating was abolished to get rid of the recurring refunds issue. Yet refund claims have grown to the last year’s level. “We are carrying out special audits of some exporters to determine how the refund claims surfaced in the absence of any duty on inputs,” the official said.
Published in Dawn, April 8th, 2017