Tax relief to leave Rs5b negative impact on economy: FBR

ISLAMABAD: The Federal Board of Revenue (FBR) has assessed that different relief measures provided in the Finance Bill 2018 in shape of reduction in tax rate on fertilizer and others would have negative revenue impact of around Rs5 billion for next fiscal year 2018-19, The News has learnt. One top official of FBR told The News on Friday that the relief measures announce in the Finance Bill after reaching out consensus among the political parties would have negative impact of Rs5 billion and now it would become an act of Parliament when President of Pakistan would grant his assent on the Bill 2018. After withdrawal of Health Levy on Tobacco at Rs10 per kg, the government has increased Federal Excise Duty (FED) rate on cigarettes so after withdrawal of levy there would be neutral impact on revenues.

With the amendments in the Finance Bill 2018, the net negative impact will increase from Rs91.179 billion to Rs96.179 billion while the impact of customs duty amendments on revenue is not yet known.

The government’s decision to reduce sales tax on major input (rock phosphate) of fertilizer sector from 17 percent to 10 percent will have around Rs 2-3 billion impact on revenue; and reduction in federal excise duty (FED) on air travel from Rs2,500 to Rs2,000 per ticket would cause revenue loss of Rs1.5 billion.

Reduction in the minimum tax for commercial exporters to 5 percent from 6 percent will be neutral, said the FBR officials as it would encourage filing of income tax returns and thereby contribute to revenue;

The decision to reduce sales tax on fish babies to 5 percent and change tax structure for matchbox manufacturing factories would have a nominal revenue impact, sources said.

The government is expecting a positive impact of increase in custom duty on import of fish fillet from 11 to 20 percent and imposition of 20 percent custom duty on export of gypsum on overall revenue collection.