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Petroleum products contribute 44pc to sales tax collection

Petroleum products contribute 44pc to sales tax collection

ISLAMABAD: Petroleum pro­ducts were the top revenue spinner of domestic sales tax, contributing around 44 per cent (or Rs233.2 billion) to the total proceeds during 2014-15, according to a Federal Board of Revenue (FBR) report.

However, sales tax collection was concentrated in few commodities as 10 major items, including POL (petrol, oil and lubricants) and natural gas, shared 73pc of the total domestic sales tax. All the major 10 items posted positive growths except natural gas and fertiliser, the report said.

The collection of Rs233.2bn through domestic sales of petroleum products in 2014-15 was 1.1pc higher than Rs230.7bn a year earlier. The major reason behind this low growth was falling international prices of petroleum products during the year.

However, a growth of 21pc in the collection was attained in electrical energy during 2014-15, despite a 32pc rise in the refunds payments.

The collection from cement recorded a growth of 16pc. The production increased by 2.3pc and input-output ratio declined from 62pc to 60pc during FY15.

The revenue from natural gas fell 28pc to Rs22.8bn, due mainly to higher input-output ratio of 80pc during 2014-15 compared to 75pc a year earlier.

Domestic sales tax collection from fertilisers dropped 6pc during 2014-15. However, the production of nitrate and phosphate increased by 3.9pc and 9.5pc, respectively.

Collection from cigarettes increased by 19pc, but the input-output ratio declined slightly during the period. On the other hand, production of cigarettes dropped by 2.8pc during the year. Collec­tion from food products rose only 1pc.

Revenue collection from sugar grew 18pc in 2014-15 despite a 7.7pc decline in production.

Collection from motor cars swelled 147pc during 2014-15 on the back of 30pc increase in production.

Collection from the beverages recorded a growth of 0.3pc. The higher input-output ratio during 2014-15 was one reason behind this lower growth. On the other hand, growth recorded in the production of soft drinks was 16.1pc.

The share of sales tax imports — a significant component of federal tax receipts — in total sales tax net collection was around 51pc in FY15 as they rose to Rs556.6bn from Rs495.3bn a year ago. Like domestic sales tax, petroleum was a leading source of sales tax collection at import stage, too, with a share of 29.8pc. The share of top three items — POL products, iron and steel, and machinery — was around 50pc.

Collection from iron and steel grew 52pc during 2014-15 due to an increase of 25.7pc in imports of iron and steel. Collection from mechanical and electrical machinery improved by 45.8pc and 88.5pc, respectively, during 2014-15.

Revenue collection from edible oil decreased by 50.9pc due to a sharp decline in the dutiable imports. A growth of 6.5pc in the collection from fertiliser came on the back of around 10pc growth in imports.

On the other hand, oilseeds increased its collection by 126.9pc, mainly due to a growth of 102.8pc in imports. Collection from organic chemicals declined by 2pc, in line with a 1pc drop in its imports.

Published in Dawn, December 17th, 2015

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