ISLAMABAD, June 11: The government has projected to raise additional revenue of around Rs20 billion on account of a range of new taxation measures taken in the budget 2005-06. Well-placed sources told Dawn on Saturday the government proposed new taxation measures in income tax, sales tax, customs and central excise with a view to achieving an ambitious target of Rs690 billion set for the financial year 2005-06.
Tax officials projected to raise around Rs10 billion from income tax; Rs8 billion from sales tax and central excise measures; and Rs1.2 billion from the rationalization of customs duties on different items.
The government had earlier projected a revenue target of Rs650 billion with a normal growth 10.16 per cent for the financial year 2005-06.
Besides these measures, the officials also proposed other taxation measures in income tax — levy of six per cent withholding tax on local purchase of cars, increasing CVT rate on stock exchanges, some taxation measures on property business, etc — for collecting around Rs6 billion extra revenues from these measures.
According to the sources, these measures were dropped on the budget day by the federal cabinet headed by Prime Minister Shaukat Aziz.
They said that it was unlikely that with the current taxation measures, the CBR would be in a position to achieve the target easily without taking any further revenue measures or bringing potential taxpayers under the tax net.
Elaborating the positive impact of revenue measures, the sources said the tax officials projected to raise more than Rs5 billion by levying 0.1 per cent withholding tax on cash withdrawal in excess of Rs25,000 from banks.
The CBR would raise more than Rs1.2 billion from the enhancement of tax rates for certain exports; Rs0.15 billion from levy of one per cent income tax at retail stage of textile products; and Rs0.700 billion from the rationalization of withholding tax on execution of contracts. The remaining revenue would be raised from other minor adjustments made in sections of the income tax ordinance.
The sources said that various relief measures announced in income tax would result in a net loss of Rs4 billion to the national exchequer. Of these a Rs2.9 billion loss will only occur due to a reduction in corporate tax rates.
According to them, the CBR would raise more than Rs3 billion only from upward revision of excise duty threshold due to an increase in retail price of cigarettes; Rs2 billion from the withdrawal of partial exemption from excise duty on payphone cards, prepaid calling cards and wireless local loop (WLL) services; and around Rs1 billion from levy of single-stage sales tax at the rate of three per cent on retail sale of textile fabrics, articles of apparel and leather, carpets, surgical goods and sports goods.
The tax officials will also raise Rs300 million from levy of sales tax on printed retail price in respect of certain consumer items like soap, detergent, perfumery and cosmetics, shampoos, biscuits, confectionery, tea, etc; and Rs10 million from bringing at par the rate of excise duty on inland carriage of goods by air with the rate applicable on travel by air. However, the withdrawal of excise duty on soap and detergent will result in a loss of Rs2 billion to the national kitty.
On the other hand, a reduction of duty on the import of textile related product will result in a loss of Rs2 billion. And also a decrease in custom duty on plastic raw material will cost Rs1.413 billion to the national kitty. The rationalization of customs duty on some items will provide extra revenue of Rs1.2 billion.