Revenue target likely

Revenue target likely
TKP, 19-Jun-10

The government is most likely to meet the revenue collection target this year. However, it may face tough challenges ahead in meeting the revised target of an additional Rs. 13 billion in the mid-term review of the budget.

The target set by the budget is Rs. 176.50 billion and the revised target is Rs.189.60 billion. The government aims to pay re-adjusted salary to government employees with the surplus revenue collection.

The revenue collection over the first 11 months of the current fiscal year was Rs. 153.59 billion, which is a surplus of Rs. 2.76 billion against the target of Rs. 150.83 billion until mid-June. The same has grown by 27 percent against the revenue collection during the same period last year. The government had collected Rs. 121.23 billion in the first 11 months last year. “We will definitely exceed the target set by the budget,” said Krishna Hari Baskota, revenue secretary at the Ministry of Finance (MoF).

He, however, added that he was not sure whether the revised target would be met, but he said the collection would reach somewhere near the revised target.

The government’s biggest success has been mobilsing the excise duty. The annual target of Rs. 19.64 billion has already exceeded in 11 months with a collection of Rs. 20.85 billion. Value added Tax was collected at Rs. 47.84 billion against the annual target of Rs. 51.56 billion. The revenue from customs duty was Rs. 31.26 billion in the 11 months against the annual target of Rs. 33.13 billion. “We will exceed the target in all these three areas,” said Baskota.

However, the collection of income tax has been relatively low with just Rs. 26.24 billion until mid-June against the annual target of Rs. 36.42 billion. “The income tax target will be met easily as 40 percent of this tax is collected in July,” said Baskota. The government will struggle to meet the target in the non-tax sector. It has collected Rs. 20.54 billion in 11 months against the annual target of Rs. 26.26 billion.

According to Baskota, the failure of public enterprises to pay revenue to the government as a result of their “precarious situation” resulted in the low collection of revenue through non-tax measures. Non-tax sectors include royalties, sales of government properties and dividends.

The government has collected Rs. 4.73 billion until mid-June as registration fees against the annual target of Rs.6 billion. It means the government will have to struggle to collect the targeted amount, according to the revenue secretary.

Meeting the vehicle tax target will also be tough as the government has failed to distribute smart licence cards and introduce computerised vehicle registration system. The government has collected Rs. 2.13 billion until mid-June against the annual target of Rs.3.50 billion in vehicle tax.