ISLAMABAD: The federal government is all set to enhance the federal excise duty on the beverage industry by 3.5 per cent in the upcoming budget 2016-17. This will result in an increase in the prices of soft drinks.
The sources in the Federal Board of Revenue(FBR) said that the federal excise duty on the beverage industry was 10.5 per cent at the moment and it is proposed to bring it to 14 per cent. As a result of this Rs 12 billion of additional tax will be collected.
At present some 300 companies are working in Pakistan that are manufacturing food and beverages. On the direction of the IMF, the government, on not fulfilling the tax target, levied taxes of some Rs 40 billion on 350 products during the first quarter of the current financial year so that the tax collection target of Rs 3104 billion for the current financial year might be achieved . Most of the products belongs to the food and beverages category.
The FBR said that in spite of putting Rs 40 billion additional tax, the federal government could collect only Rs 2528 billion and now in the last 40 days of the fiscal year, the government would need Rs 576 billion to achieve the target.
It means that Federal Board of Revenue has to collect a tax of Rs 14.4 billion per day.
The Federal Board of Revenue also failed to achieve the tax collection target in the previous financial year of 2014-15 despite reviewing the same thrice. First the FBR reduced the target of Rs 2810 billion to Rs 2605 billion but it could collect taxes of Rs 2590 billion only by the end of fiscal year 2014-15.
The sources said that it would be proposed in the next budget 2016-17 to put the tax collection target as Rs 3601 billion. The IMF suggested Rs 3770 billion for the upcoming financial year, but the Chairman FBR has fixed the target of Rs 3601 billion by keeping in view the ground realities.
The FBR is taking the review for the measures which are to be taken to realise the target including levy of new taxes, to abolish SROs that were issued to benefit the privileged class, alteration in taxes, improving the administrative channel and bringing in new tax payers in the tax net. Moreover the FBR is also mulling on how to increase the price of powdered milk on the recommendation of the National Assembly’s standing committee on trade. This step would give advantage to local farmers.
The government has made all the preparations for the coming budget which has a volume of Rs 4.4 trillion, which would be presented in the parliament on June 3by Finance Minister Ishaq Dar.
