ISLAMABAD, Aug 11: The government has decided to work out measures for arresting constant decline in sales tax collection at import stage to achieve the target set for the financial year 2003-04.

Officials told Dawn on Monday that despite the massive increase in the value of imports, the collection of sales tax at import stage registered a negative growth during the fourth quarter of last year and first month of the current financial year.

Consequently, the revenue collection under the head of sales tax remained short of target by 4.5 per cent to Rs194.8 billion in 2002-03 against the target of Rs204 billion set for the same year.

Similarly, the revenue collection under sales tax in July 2003 further declined by 18.2 per cent to Rs10.1 billion against Rs12.348 billion revenue collected during the corresponding month of last year.

Interestingly, the revenue collection from customs duty rose by 28 per cent during the month under review over the collection of the same month of last year. This means that dutiable imports registered a growth in comparison to the last year.

The tax authorities are worried that in the wake of such constant decline in sales tax collection at import stage, they would be unable to achieve the target of Rs223.1 billion set under the same head for the financial year 2003-04.

Official figures made available to Dawn showed that the growth in the revenue collection at import stage declined to only 2.9 per cent during the forth quarter of financial year 2002-03 over the same period of last year.

This slowdown was neither consistent with the growth of imports, which increased by 7.8 per cent during the same period under review nor with the growth of gross customs duties, which increased by 20.7 per cent.

Elaborating the slowdown, the tax officials said one plausible explanation for this unusual phenomenon was the difference in effective rates. They said the effective rate for sales tax remained at 14.4 per cent in 2002-03, while the effective rate for customs duties increased from 18.4 per cent to 19.1 per cent in the same year under review.

They said that the composition of imported commodities and the variation of customs duty rates between 5 per cent and 25 per cent on the one hand and the uniformity of sales tax rate at 15 per cent on the other, were mainly responsible for slow divergence.