Figure-fudging fiasco: FBR chairman offers resignation

Published: August 14, 2011

Siddique is likely the first high-ranking official who has volunteered to resign as a result of the incident that caused tremendous embarrassment to the government. He is scheduled to retire anyway in January 2012.

ISLAMABAD: 

In a rare move, Federal Board of Revenue Chairman Salman Siddique has offered to resign, just a few months before his scheduled retirement, in the face of an internal finance ministry inquiry for misstating the tax collection figures for fiscal year 2011.

Sources in the finance ministry told The Express Tribune that Siddique offered his resignation to Finance Minister Abdul Hafeez Shaikh after he failed to live up to his commitment to meet the revised Rs1,588 billion tax collection target last year and alleged his involvement in ‘figure-fudging’ controversy – when the government admitted that it had been wrong about its June 30 claim of having met the target.

Shaikh, however, advised him not to resign, fearing a chain reaction would lead to major changes within the finance ministry, sources said. Siddique is likely the first high-ranking official who has volunteered to resign as a result of the incident that caused tremendous embarrassment to the government. He is scheduled to retire anyway in January 2012.

During meetings with the International Monetary Fund, the FBR chairman had repeatedly “offered his neck” if the government was unable to meet its 2011 tax collection target, which had been revised downwards three times. Siddique had proudly announced on June 30 that the government had achieved that target, though he was later forced to admit that the FBR had fallen short by Rs38 billion.

(Read: Fudging tax figures)

Sources said that the finance minister had completed his inquiry into allegations that the FBR misled the public. While the ministry admitted that the FBR’s decision to seek Rs42 billion in advance taxes from banks and state-owned enterprises was a “bad judgment call” and a “silly move”, he seemed to feel that those measures did not carry ill intentions.

The ministry’s initial findings, however, blame not just the FBR chairman but also Finance Secretary Waqar Masood, Inland Revenue Service chief Khawar Khursheed Butt and other senior FBR officials as indirectly responsible for the misleading figures.

It is not clear whether the finance minister has presented his findings to Prime Minister Yousaf Raza Gilani. Sources said that the finance ministry does not want to punish the officials involved severely but also wants to dispel any notion that the “plan [that led to the misleading figures] was hatched under official patronage”. Sources said there may be a reshuffle at the top levels of the FBR.

‘The plan’ being referred to, was the ‘Plan B’ that the FBR activated on July 4 when it realised that the government would miss the target by Rs42 billion. The government had then scrambled to arrange for ways to overcome the shortfall. Siddique had been convinced until June 30 that the FBR would meet the target, and the findings fault him for relying on information that was not relayed through the normal FBR chain of command.

The minister’s findings also showed that the FBR additional secretary did not assist the chairman to the best of his abilities.

The head of the IRS was held responsible for his inability to give accurate sales tax collection figures to the FBR chairman. Sources said his argument that he was kept out of the loop was not substantiated by the facts. Moreover, Butt did not give his dissenting note to the chairman about the Rs1,590 billion tax collection claim that Siddique announced at the June 30 press conference.

(Read: After figure-fudging fiasco, govt may have to raise taxes)

Pakistan’s credibility as a borrower was severely damaged amongst international lenders following the admission of the misleading numbers.

Published in The Express Tribune, August 14th, 2011.

Reader Comments (11)

  • Hunza bleeds
    Aug 14, 2011 - 4:25AM

    why always ‘offer to resign’ why not resign straight away. we try to copy the west but only half way when we feel the axes falling on our own feet.

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  • Aug 14, 2011 - 4:58AM

    LOL their fighting to hold the line.

    I guess 2+2 equals 5 in the FBR :D

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  • Seher Siddiqui
    Aug 14, 2011 - 7:54AM

    This is not the first time that tax collection figures have been fudged. In past also state run institutions and large business groups have been issuing cheques favouring Government treasury without any assessment on the evenings 30th June and 31st December and at the same time receiving a refund cheque dated 2nd/3rd July and 3rd/4th January. This time however, cash starved organization like PSO was also asked to be a part of manipulation exercise to the tune of around 12 billoion. Salman Siddique had the easy way out as suggested fudging experts in the CBR/FBR and the Finance ministry. It was Finance Ministry which forced to invoke the same old technique.As a matter of fact Finance Ministry forced him to do this. Salman was helpless because PSO, PIA, Railways, some banks etc. had not paid to the Government the withholding taxes collected by them from their customers.This is criminal on the part of these organizations and their chief executives and their Board of Directors. Let there be a cleansing exercise if we are seriously interested in improving our Governance and Economy. You should be SACKING rater than reluctant in accepting RESIGNATIONS, unless you are a part of the whole PLAN. Be kind to our ailing country.

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  • Tooba karo
    Aug 14, 2011 - 8:14AM

    Until this government does not look at itself in the mirror and question it’s own excesses of wasteful expenditure, the financial challenges of gov cannot be overcome.

    This in turn leads to the kind of situation being discussed here and the inordinate pressures on industry and business by the FBR to cough up all sorts of taxes specially to
    He notorious end June demands for “advance” payments.

    The system needs to clearly delineate between real tax collection (I.e past event related) versus on account and advance taxes as well as take account of the billions of pending refunds (most which are legitimate refunds under the law) which Fbr refuses to give back and is delaying to future years.

    And the situation will only exacerbate. FBR seems to wants to tax business out of business. Soon with the joint threats of low economic activity and overbearing burdens of corporate and indiret taxes, their may not be any legitimate tax payers left to pay tax in the country

    Their has to be a balance in collections now versus creating a SUSTAINABLE tax environment for business as with no business profits there will be no profits to tax and no incentive for people to move away from the brown paper bag tax system sending more money out of Gov into private coffers.

    The current gov has plundered enough of the money of all legitimate tax payers like me and my employers. Enough

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  • H.A. Khan
    Aug 14, 2011 - 8:56AM

    It seems that Member Inland Revenue conveyed wrong numbers to the Chairman gross instead of net) and the Chairman without verifying the same called a press conference to announce that Budgeted tax collection has been achieved. It is only latter that FBR realised that they messes up.

    Gracefully the Chairman and Member Inland Revenue MR Khawar Khurshid should resign and FBR should move forward. About 45 days of new fiscal year has started and FBR is in screen saver mode –just going round and round. There is no policy,no strategy in FBR as to how tax target for next year will be achieved.So much so even the Income Tax Returns for Tax Year 2011 have not been put on FBR website and they are due on 31 August in a large number of cases.

    Moving forward; the Chairman of FBR should be appointed from the Tax Department or from private sector who knows the complexities of tax

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  • Muhammad Javed
    Aug 14, 2011 - 10:32AM

    FIGURE FEDGING NOT NEW

    The media recently made a hue and cry over the fudged figures by FBR. Our media in fact is alive on ever creating unnecessary sensation just to avoid touching the real serious issues. Why so much fuss on these fudged figures as if this had been a very unique case happening first time. There is no denying the fact that our Governments since three decades are thriving merely on “figure work” may that be about inflation, economic growth, manpower export, poverty reduction, “manufacturing and distribution” of justice as found in Annual Reports of our ombudsmen etc. My house got fire three years back so presently I might not be able to trace but I had kept as a souvenir a press clipping of 30th June news papers of that year reading the CBR was behind so many millions in tax collection. The next day 01st July merely after 12-20 hours later the newspapers were showing the CBR had collected so many millions above target.

    Recently I made a complaint No. CPD/250711/M/25370 with the Pakistan Telecommunication Authority that all of a sudden my mobile on international dialing has started producing a computerized auto-response that this facility (international dialing) was not available to me and the Mobilink was not responding as to why an available and long used facility was blocked/withdrawn. On this while the Mobilink had been in process of seeking unnecessary illogical information from me phase-by-phase not just in one go, the PTA has very proudly informed me that my complaint has been resolved. How the monitoring agency came to know that fault has been removed without my so confirming is a wonder. I am sure it is in line with our today’s bureaucratic technique to deal with the public related issues sitting in air conditioned office and thus keep increasing figures of their successful work done which in return ensures extension. This is the same monitoring body which often has triumphed that unregistered SIMs will be closed, so many millions have been closed etc whereas the fact is there is not a single, repeat not a single, “unregistered” SIM in the country.

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  • Aug 14, 2011 - 12:06PM

    Finance Minister Hafeez and FBR Chairman Siddique can only ‘offer’ and not ‘hand in’ resignations for their perennial shortcomings. And that too after six weeks.
    The shortfall of PRs.42 billion is not a small amount for a debt ridden country like ours. Right from the top to the lowest tier of tax men they are incompetent and ‘hungry.’
    Taking advance tax on advance tax from Banks, Insurance and other corporations is a clear enough manifestation there is something definitely wrong. And we all know it. And that is the absence of tax on agriculture, services, sale and purchase of property and tax on wholesale and retail shops. This is a major pitfall. For the simple reason there is a total absence of will to document the entire economy.
    Agreed it cannot be done in one year but the process should start now and a strict watch and ward should be present. Otherwise, after sixty-four years, excuses and loans will not solve the problems only lamenting and ‘figure fudging’ will continue and tax payers will start decreasing.
    Mr. Finance Minister, the writing on the wall need not be looked at again. It has been there a long time and the sources of loans are drying up or soon will be. If you want to live with your head high and not have creditors knocking on your door, the time is now or else sit at home in the World Bank. Salams to Pakistan

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  • parvez
    Aug 14, 2011 - 12:59PM

    The fish rots from the head downwards.

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  • Meekal Ahmed
    Aug 14, 2011 - 2:58PM

    This, to repeat, is a storm in a tea cup. Advance tax is the oldest trick in the book. There are other time-tested gimmicks to inflate the year-end tax revenue figures. Then all that gimmicry is unwound in July.

    The outside world has looked on with amusement and a touch of disgust. As far as I know, the figures were not passed on officially to the IMF and others so no harm done. Even if it had been passed on since the GOP-IMF program is inoperative, it would not be a case of misreporting and subject to a penalty. We should be grateful for that too and breathe a sigh of relief.

    You can dismiss whom you want and as many as you want and nothing will change. The FBR cannot be healed. It is beyond redemption.

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  • Ali Turk
    Aug 14, 2011 - 6:15PM

    @ I agree with the comments of both Mr H.A.Khan and Mr Meekal Ahmed.

    FBR is in serious mess. In last 45 days all I have read is internal mud slinging between Member Inland Revenue and rest of FBR rather than attempting to save their jobs they should gracefully leave and FBR should focus on the job they are supposed to do. And by the way where is Official Spokesman of FBR—not hear a word from him/her in last 45 odd days.

    This country needs enhanced tax revenues for development.

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  • Dr Ali Huesien
    Aug 14, 2011 - 6:22PM

    What a sad news, this makes one wonder; can the government officials wonder: in Pakistan can government officials fudge the figures and get away with it whereas a ordinary person who does the same gets penalized and punished!

    Pakistan zindabad….

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