ISLAMABAD: The national exchequer was set back by Rs26 billion in March, as turmoil and agitation in two of the country's largest cities took a toll on the government's efforts in salvaging the country's fast deteriorating fiscal balance.
Riffat Shaheen Qazi, official spokesperson for FBR, said that the Karachi riots and agitation against load-shedding in Lahore severely affected collection targets. In order to recoup losses, the authorities on Monday decided to increase April’s targeted collection by the same amount, she said. Qazi said the new collection target for April will be Rs188 billion, as against the previous target of Rs161 billion.
It seems that the finance ministry is still struggling to restrict the ever-widening gap between its expenses and income. The Rs26 billion revenue shortfall will widen the budget deficit for March by 0.12% of the total size of the economy. For the current fiscal year, the government had estimated a 4% budget deficit of Rs840 billion, which has already been surpassed.
The total revenue collected in March 2012, worth Rs162 billion, was also a mere 12.4% higher than tax receipts in March last year.
A 12.4% growth in revenue indicates that the Federal Board of Revenue (FBR) is losing at least 4% in taxes monthly, as the figure is below nominal Gross Domestic Product (GDP) growth of 16% (12% inflation plus 4% projected economic growth). According to economic and tax experts, the tax growth rate should equal nominal GDP growth if absolute parity is to be maintained in year-on-year revenue collection figures. The current trend indicates that the FBR’s efforts in collecting taxes have been negligible, as any collection up to nominal rates is considered automatic.
The FBR now faces the difficult task of maintaining at least 24% growth in revenues on average over the next three months, in order to achieve its annual target of Rs1,952 billion.
An official of the FBR said that authorities have constituted a four-member committee to determine the exact impact of Karachi riots and Lahore strikes on revenue collection. The committee will submit a report at the earliest on deciding the future course of action, he added.
FBR top brass has also decided to cancel Saturday holidays for its agents till June 30 in an effort to recoup losses.
Average collection
From July through March, the FBR bagged Rs1,271 billion in taxes, which is Rs250 billion or 24.6% higher than collections in the corresponding period of last fiscal year. The average collection of Rs1,271 billion is less than two-thirds of the annual target. The FBR now needs to collect another Rs681billion – on an average of Rs7.6 billion a day – to meet that benchmark.
Published in The Express Tribune, April 3rd, 2012.
COMMENTS (5)
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FBR should deploy 90% of it's officers in expanding the tax base and leave the existing tax payers for two years.
April tax collection target of Rs 188 billion is just not possible looking at the state of economy and the energy situation
People must punish governments in this way.
FBR Farigh Baikar Rule
How can they increase . Afterall If economy is not generating any Money How could it be taxed????
FBR has to be realistic. Collection of Rs 188 billion in month of April is next to impossible. The sluggish economy does not permit this type of tax collection.In addition I understand that over Rs 50 billion of tax is stuck up due to stay orders of court.