Government’s policy to charge different tax rates for filers and non-filers has failed to yield considerable results. Authorities expanded the withholding tax net to almost all types of transactions, however, top contributors to tax treasury have remained the same.
In defense of government and policy makers, increased revenue through withholding tax has somewhat silenced the critics of the tax policy. However, this doesn’t change the fact that despite the new policy, top 20 contributors to the tax-net have remained unchanged in the past four years.
PML-N government announced two different tax rates for filers and non-filers in their tax policy. In a bid to increase the the tax-base, government increased the withholding tax to cover around 74 transactions. More than 20 of these new areas failed to generate Rs 500 million cumulatively. However, the tax collection through withholding tax did increase to 70% of total tax, up from 56% in just four-and-a-half years.
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The top 10 contributors have stayed the same despite the new policy. In fiscal year 2016, these 10 areas contributed 93% of total revenue through tax collection. In current fiscal year 2018, these areas account for 86% of total revenue through taxes.
Here are top 10 contributing areas of tax revenue.
Government collected Rs 426.6 billion (86%) of the total Rs 491 billion from taxes through these 10 contributors.
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The government, in its policy, targeted hotels, restaurants, marriage halls, foreign films, educational institutions, wholesalers and retailers, dealers’ commission, banking transactions, realty sector and clubs to increase tax revenue and tax base. However, the policy failed to yield any considerable results. Here are the numbers behind government’s tax policy for the FY 2018.
Overall, from withholding taxes, the WHT on contracts contributed 30% of total tax revenue. Rs 127 billion were collected from withholding tax on contracts during first half of current fiscal year.
So, the new policy might have increased the revenue but it has failed to increase the tax base of the country.
Via Tribune