ISLAMABAD: The government has been urged to streamline the tax recovery mechanism, use modern technology and simplify the tax filing system for taxpayers to strengthen the national economy.
Talking to WealthPK, Dr Nasir Iqbal, economic expert and associate professor at Pakistan Institute of Development Economics (PIDE), said that despite the economic recession, the Federal Board of Revenue (FBR) did an excellent job to meet the upward revised revenue target of Rs6.1 trillion for the previous fiscal year.
However, he said that the government should further streamline the tax recovery mechanism and take strict action against the officials, who showed laxity in the recovery of tax. The government should facilitate taxpayers in the submission of taxes.
Dr Nasir Iqbal said that government should ensure maximum utilisation of modern technology to identify the potential taxpayers, who are currently out of the tax net. He hoped that the use of modern technology and further streamlining of the tax recovery mechanism would enable the FBR to achieve its tax revenue target. Instead of increasing taxes, the government should make efforts to widen the tax net.
According to the official figures, the FBR collected a net revenue of Rs6,125 billion during the financial year 2022, exceeding the upward revised target of Rs6,100 billion and showing a massive growth of about 29.1 percent. Likewise, the gross revenue collection increased from Rs4,996 billion during the financial year 2021 to Rs6,460 billion in the financial year 2022, showing an increase of 29.3 percent.
The FBR has said that one of the key features of its outstanding performance is a significant increase in direct taxes, which registered a growth of 32 percent in the fiscal year 2022. The net collection from income tax during the fiscal year 2022 was Rs2,278 billion against Rs1,731 billion in the financial year 2021. The sales tax collected in the financial year 2022 was Rs2,525 against Rs1,983 billion in the fiscal year 2021.
The net collection from customs duty was Rs1,000 billion in the financial year 2022 against Rs747 billion in the fiscal year 2021. The amount of federal excise duty was Rs322 billion in the financial year 2022 as compared to Rs284 billion in the fiscal year 2021.
The net tax collection for the month of June in 2022 was Rs763 billion as compared to Rs580 billion collected in the same months of 2021, showing an increase of 28.9 percent.
The FBR said the a year-on-year growth of 29.1 percent in tax collection is unprecedented. On the other hand, Rs335 billion was disbursed to taxpayers as refunds in the fiscal year 2022 as compared to Rs251 billion paid in the fiscal year 2021, reflecting an increase of 33.3 percent.
Likewise, refunds of Rs105 billion were issued during the fourth quarter of 2022 against Rs68 billion during the same period in 2021, showing an increase of 55.2 percent. Similarly, refunds of Rs39 billion were issued in June 2022 against Rs27 billion in the same months of 2021, registering an increase of 43.8 percent. In June 2022, refunds were paid to more than 5,800 taxpayers as compared to 3,100 in the same months of 2021.
The Ministry of Finance in its monthly economic outlook report, a copy of which is available with WealthPK, said that although the FBR performed well, measures to offset the impact of higher prices of international commodities and oil due to the Russia-Ukraine conflict took a significant toll on revenue and expenditures.
In the wake of prevailing challenges, the FBR is striving to improve domestic tax collection through various policy and operational level efforts. It has introduced a new culture of clean taxation with a focus on collecting only the fair tax and not holding up refunds that are due to be paid. This has ensured the much-needed cash liquidity for the business community.
-INP
