Tuesday, April 14, 2009

Lay-offs, pay cuts contract IT growth…

Pin It KARACHI: As the lay-offs and pay-cuts are continuing in the private sector, growth in income tax has started contracting in the overall revenue.
The Regional Tax Office (RTO) Karachi data on Monday revealed a significant slump in the income tax growth paid by the employees of the private sector in March 2009 as it posted only five percent growth as compared to the same month previous year.Particularly, in the commercial capital of the county where people from all provinces come to earn livelihood, the amount of income tax received from salaried class has recorded Rs 1.119 billion in the last month, against Rs 1.130 billion amount recorded under the same head.However, the income tax amount from the salaried class witnessed 13 percent growth in February 2009 with Rs 0.967 billion, as against Rs 0.856 billion in the same month of last fiscal year.This tax amount contributed nearly 10 percent of the projection of overall revenue collected by RTO Karachi in March 2009 that stood at Rs 10.061 billion. On the other hand, the tax contribution witnessed nearly 25 percent in February 2009 with an overall revenue od Rs 4.201 billion in the same month. As many as 0.524 million salaried class taxpayers are registered with RTO Karachi under section 149. Accordingly, majority of them belong to private sector while employees of public sector also pay tax to the regional office.Tax officials were of the view that heavy lay-offs, pay-cuts and vanishing job opportunities in the city have led to decline in the growth of income taxes. They pointed out that the tax generation in the banking, telecom, textile sectors and insurance industry has decreased significantly. Besides, taxes from various media organisations are also contributing lesser revenue as compared with earlier the earlier figures. They added that a significant number of taxpayers have been ejected in the tax net owing to job cuts whereas the salary raise and increments have been neglected this year by the private sector firms, causing decline in income tax growth.“The addition of salaried class taxpayers in the tax net was very minimal last month as the number of job opportunities, through which taxes could be generated, have been decreased to none,” a tax official close to revenue assessment told Daily Times. He said the cut in tax growth may further be aggravated to post negative growth in the coming months with the prevailing situation, however, if recovery in the economy appears then the growth will return with the same pace.The income tax received from the government employees has been recorded at Rs 41.764 million in March 2009, as against Rs 19.569 billion in the same month of last fiscal year.RTO Karachi has received Rs 8.865 billion in July to March from the salaried class as compared with Rs 7.224 billion in the same period of last fiscal year, showing a 23 percent increase in growth.Overall, the tax department has collected Rs 72.913 billion in the three quarters of the fiscal year, against Rs 61.844 billion in the same period, showing 18 percent increase on yearly basis and completed 71.62 percent of the target.The tax unit has been set Rs 127 billion revenue collection target of the ongoing fiscal year that seems to be revised as the Federal Board of Revenue intended to meet International Monetary Fund target of 10 percent tax-to-GDP ratio.

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