An amount of Rs6.8 billion as revenue loss has been estimated on implementation of reform package by the Federal Board of Revenue (FBR).
The proposed Finance Supplementary (Second Amendment) Bill, 2019, also known as the reform package, is anticipated to have a negative impact on revenue collection, resulting in a loss of approximately Rs6.8 billion, according to a statement released by the FBR.
In response to recent news reports speculating on additional revenue measures in the finance supplementary bill, the FBR sought to clarify that the agency would not be experiencing any additional revenue influx through the proposed amendments.
The FBR emphasized that the Finance Supplementary Bill does not introduce any new taxes. However, it highlighted the government’s efforts to curb import volumes and maintain Rupee/Dollar parity by implementing measures such as an increase in excise duty on vehicles with a cylinder capacity exceeding 1800CC.
The FBR estimated that this particular measure aimed at reducing import volumes could generate approximately Rs3 billion in revenue. Simultaneously, the government has introduced relief measures amounting to around Rs10 billion, providing some respite to specific sectors or individuals.
Despite the potential revenue generated through increased excise duty on certain vehicles, the FBR anticipates an overall loss of Rs6.8 billion in revenue due to the combined impact of the proposed measures outlined in the Finance Supplementary Bill.
The decision to enhance excise duty on vehicles with cylinder capacity above 1800CC is a strategic move by the government to address economic challenges and control the trade balance. By discouraging the import of high-capacity vehicles, the government aims to curb the outflow of foreign exchange and stabilize the Rupee/Dollar exchange rate.
While the measure is expected to contribute to revenue generation, the relief measures announced by the government will mitigate the financial burden on specific segments of the population or industries. The balance between revenue generation and providing relief underscores the government’s efforts to navigate economic challenges while considering the welfare of its citizens.
The FBR’s acknowledgment of the expected revenue loss indicates the complexities involved in balancing fiscal policies to address various economic aspects simultaneously. The agency plays a crucial role in revenue collection and management, and its assessments are integral to understanding the potential impacts of legislative changes.
As the Finance Supplementary Bill moves forward, stakeholders, including businesses, taxpayers, and policymakers, will closely monitor its implementation and the subsequent effects on the economy. The dynamic nature of fiscal policies requires continuous evaluation and adjustments to strike a balance between revenue generation, economic growth, and the well-being of the populace.