ISLAMABAD, Jan 1: Prime Minister Shaukat Aziz said on Saturday that government would provide all necessary resources for the continuation of tax administration reforms. The premier stated this in a meeting with the chairman, CBR, M Abdullah Yousuf , according to an official announcement issued on Saturday.

Mr Aziz said that simplification of procedures, automation and avoidance of direct contact between the government officials and assessee were aimed at greater transparency and these measures have yielded commendable results.

"Reform is an ongoing process and we will follow them in letter and spirit," he observed.

The prime minister commended the CBR team on excellent performance with regard to revenue collection, which surpassed the target by 13.5 per cent during the six months of the current fiscal year.

The chairman briefed the prime minister on the performance of the tax wise revenue collection. He said that the reform agenda, use of new technology automation, etc., have made Pakistan's revenue and tax regime efficient and transparent.

TAX BASE: The Central Board of Revenue (CBR) has failed to broaden the tax base as maximum revenue generating spinners are a few major items under the head of the four federal taxes-sales tax, income tax, central excise and customs duty during the last years.

Official sources told Dawn on Saturday that among these items, there were some items like sugar, cement, beverages, cigarettes from which both sales tax and central excise duty have been collected. While maximum revenue share of income tax was raised through deduction at source (withholding tax) and customs duty on items of around 15 chapters.

The over all growth registered in the revenue collections during the last years in all the four federal taxes was mainly due to the tangible growth materialised in the revenue realization from these items. This showed that the growth in the revenue collection did not involve any profound efforts made on the part of the tax officials.

According to a quarterly report of the CBR, the share of withholding tax in income tax- a tax deducted at source from the taxpayers- stood at 52 per cent, while 45 per cent income tax came from the voluntary compliance and the rest from other sources.

Within the withholding tax, revenue from contract stood at 26 per cent, salary 12 per cent, export 7 per cent, interest 5 per cent, electricity 5 per cent, telephone 4 per cent and 14 per cent from other sources.

The report says that around 69 per cent of domestic sales tax collection has been realized from 10 major revenue spinners during the first quarter of the current fiscal year, which suggested that the sales tax base continued to be narrow. The revenue spinners included-POL products, telephone and related telecom services, electrical energy, iron and steel products, natural gas, and cotton yarn.

But among them, the report says, the domestic sales tax collection has registered growth due to widespread use of mobile phones and increase in demand due to reduction in telephone rates.

The increase in collection of sales tax from electrical energy could be attributed to higher demand for electricity. This could also be gauged from higher domestic demand for electrical gadgets-TV, refrigerators, deep freezers, electric fans, washing machines, etc.

The increase in the sales tax from natural gas was again due to higher demand in the winter for the commodity and higher demand for manufactured products. Similarly, the growth in collection from cotton yarn, iron and steel was in conformity with the improved economic activity in the textile and housing sector.

According to the report, the five major revenue spinners that contributed 90 per cent of the central excise duty included cigarettes, cement, POL products, natural gas, beverages and beverage concentrates.

The report further says that only 15 commodity groups cover 61.6 per cent of the total imports and 81.4 per cent of the total dutiable imports, the share of dutiable imports of the commodities in total imports has been 83.4 per cent.

In response to lowering of duty on some categories of vehicles, imports of vehicles (Chapter 87), has emerged as the top revenue-generating source of customs duties.

This showed that maximum revenue of the CBR was realized through these few items and there was a potential for increasing the tax base by increasing the revenue from other spinners as well.