Tax collection target for next FY may be Rs4,007 bn

ISLAMABAD: Despite the rising political temperature in the aftermath of Panama verdict, the government is considering fixing the tax collection target of Rs4,007 billion for the next budget 2017-18 in a bid to ensure financial discipline.

“The IMF has assessed that the FBR can collect just over Rs4,007 billion in the next budget 2017-18 on the basis of Rs3,500 billion collection in the FY 2016-17 ending on June 30, 2017. Federal Minister for Finance Ishaq Dar will give ‘go ahead’ after his return from attending IMF/WB’s spring meeting in Washington D.C. this week,” official sources confirmed while talking to The News here on Sunday.

According to IMF’s assessment, FBR’s collection could fetch Rs3,500 billion against the actual target of Rs3,621 billion for the current fiscal year so next year’s target could achieve Rs4,007 billion through nominal growth as well as through combination of administrative and taxation measures.

The FBR has prepared a detailed list of proposal for next budget and big ticket items are continuation of Super Tax in the wake of ongoing war against terror especially in the context of reconstruction in the aftermath of Zarb-e-Azb in tribal areas.

“We have so far spent around $3.5 billion on Zarb-e-Azb and reconstruction efforts in tribal areas so next budget will be aimed at consolidating the gains Pakistan achieved after rendering so many sacrifices,” said the official and added that the government will have to allocate more than Rs100 billion in this head.

“The rate of super tax may be changed but this decision will be taken by Ishaq Dar,” said the official and added that the rate of withholding tax for creating difference between filer and non filers would be further deepened in the coming budget. The rate of withholding tax on cash withdrawal will be enhanced in the next budget but exact rate will be determined in next two weeks.

Top officials have ruled out possibility of abolishing seventh schedule from the income tax related to special regime for banking sector in the budget. “It can be major move if the govt decides to do away special tax regime for banking sector but its chances are very dim,” said one top official through brief SMS from abroad.

In the wake of completing five year term by the PML-N regime, some circles are suggesting fixing of tax target less than Rs4,000 billion but Ishaq Dar believes in setting ambitious target so that he would definitely consider to cross this psychological barrier of Rs4,000 billion in the next budget.

Chairman Tax Reform Commission (TRC) Masood Naqvi told The News on Sunday, that the government had implemented certain proposal of TRC in the last budget and it was expected that more proposal including changes in the laws and procedures would be incorporated in the coming budget. He said that the TRC had recommended to bring legislation related to benami transaction which was already approved by the parliament so it was expected that more recommendation would be implemented in the coming budget, he concluded.