ISLAMABAD, Feb 20: Poor enforcement of the sales tax regime by Central Board of Revenue (CBR) in the last few years has resulted into a narrow tax-base, where just 30 top taxpayers pay more than 50 per cent of the total sales tax receipts.

Though in its efforts to widen the sales tax net in the country, the CBR is focusing on raising the number of registered sales taxpayers, which currently stands at 1,24,900. This number is far lower than what it should be, given the size of the market and the economy.

Official statistics available with Dawn indicated that during the fiscal year 2006, 30 top taxpayers contributed 50.4 per cent of the total domestic sales tax collection reflecting a growth of 19.7 per cent as against one per cent growth of all the remaining taxpayers.

Moreover, during the first six months of the current fiscal year, the 30 top taxpayers contributed to a growth of 65 per cent in payment of sales tax as against just one per cent growth in payment of tax by all the remaining taxpayers.

The statistics clearly indicated poor enforcement of the sales tax regime, which resulted into a massive tax evasion by medium and small taxpayers as the sales tax department has yet to devise a plan to plug loopholes in the existing system.

According to the CBR statistics, there are only 31,099 manufacturers registered with the sales tax department across the country that are paying sales tax including 32,456 importers and 11,611 exporters.

Among the existing lot, the biggest numbers are wholesalers and distributors, which stood at 37,818 contributing to sales tax revenue followed by service providers numbering 9,038.

There are only 2,038 retailers, who are paying sales tax to the government. This is the area where a great scope exists for bringing more retailers under the net.

An official in the CBR said sales tax department had also failed to diversify tax collection as maximum revenue generating spinners are also a few major items, which contributed more than 80pc of the total revenue.

It is believed that thousands of businessmen and professionals do not fully document their income with the result that they pay a fraction of what is due. Part of the problem here is that the tax officials are involved in this practice and support the system in place as this offers them opportunities of corruption.According to the official more than 70 per cent of domestic sales tax collection is realised from 10 major revenue spinners, which suggested that the sales tax base continued to be narrow. The revenue spinners include - POL products, telephone and related telecom services, electrical energy, iron and steel products, natural gas, and cotton yarn.

Analysts have suggested an early comprehensive strategy for widening of the tax base. Though like past, it would attract stiff resistance but tax officials must convince trade bodies and business association about this problem.