ISLAMABAD, March 10: Senate Standing Committee on Finance and Revenue on Saturday suggested downward revision of the general sales tax (GST) rate from current 15 per cent to a reasonable level to reduce the burden of consumption tax on poor people.

The committee also asked the CBR to take steps to check tax evasion and expand the tax-base besides plugging the under-invoice resulting into a huge revenue loss to the national kitty. The committee headed by Senator Ahmed Ali reviewed the performance of the CBR during the fiscal year 2005-06.

Chairman CBR Abdullah Yousuf informed the committee that an amount of Rs513.6 billion had been collected in first eight months (July-February) of the current financial year as compared to Rs419.3 billion in the same period last year, registering a growth of 22.5 per cent.

He said the amount realised was also Rs19 billion more than the target set for the first eight months.

Mr. Yousuf said CBR achieved a growth of 19 per cent in number of returns filed by the taxpayers, which stood at 1.5 million up to December 2006 as against 1.3 million received during the same period last year. He said that the number of returns filed as of now were 1.6 million, which are growing at the rate of 20 per cent per annum.

The chairman briefed the meeting about the steps taken under Tax Administration Reforms Programme (TARP), for reforming the tax machinery of the country. He said a third Large Taxpayers Unit (LTU) was under construction in Islamabad and it will start working by June this year.

He told the committee that the pilot project ‘Pakistan Customs Computerised System’ (Paccs) had been launched. This automated system has reduced the average cargo clearance time from 5 days to 4 hours for imports and one hour for exports.

Mr. Yousuf further said that the CBR had developed a computerised system of Tax Payment Receipts (CPR) in collaboration with National Bank of Pakistan and State Bank of Pakistan, which has been endorsed by the ministry of finance and the AGPR. Now all information regarding CBR staff is available through the newly developed Human Resource Information System (HRIS).

He admitted low tax-to-GDP ratio, mismatch in sectoral contribution to GDP and taxes, low level of compliance, wide-ranging tax and duty exemptions and large underground and informal economy.

The standing committee appreciated the performance of the CBR in revenue realisation and implementation of the tax reform programme.

APP adds: Giving details of improvement in voluntary compliance in July-December 2006 the chairman said that the CBR had achieved a growth of 19 per cent in number of returns filed; 94pc in payments with returns (Rs45 billion against Rs23 billion) and a growth of 131 per cent achieved in advance tax payments (Rs59 billion against Rs26 billion).

He said that the CBR headquarters, income tax structure, audit and inspection, training, intelligence and valuation directorates have been transformed and started working on functional lines.

He said that besides, six Medium Taxpayers Units (MTUs) have been established in major cities of the country. Similarly, 4 out of 13 Regional Tax Offices (RTOs) have started operations. Moreover, model customs collectorates (MCCs) have been operating since 2004.

He said that the e-filing of tax returns across taxes have already been started.

Abdullah Yousuf was of the opinion that CBR was a key financial institution of the country because it collects 90 per cent of the total revenue of the country, contributes in tax plus non-tax revenue around 65 per cent and covers nearly 50 per cent of the federal government's expenditure needs.