Top taxman plays safe, refuses to rule out another mini-budget

FBR needs to collect Rs218 billion in remaining days of 2015, additional measures could be implemented

ISLAMABAD:

Barely a few weeks after the government announced tax measures to raise Rs40 billion, the country’s top tax official has said that another mini-budget could not be ruled out.

Tax authorities need to collect Rs218 billion in the remaining days of 2015 to stay on course for the fiscal year.

Federal Board of Revenue (FBR) Chairman Nisar Mohammad, recently appointed to the post, remained reluctant on giving a verdict.

“As of today, we do not see the need for additional taxes to achieve the fiscal year’s annual target of Rs3.104 trillion,” said Mohammad. However, he hastily added, “I cannot say anything if circumstances change tomorrow due to unforeseen events.”

He was speaking at the forum of the Senate Standing Committee on Finance and Revenue that had called tax officials for a briefing on the Rs40 billion mini-budget the government introduced this month.

In its two and half year tenure, the PML-N government has so far imposed additional taxes worth Rs930 billion, increasing the cost of doing business and making daily usable goods expensive.

The committee criticised the government for bypassing the parliament to impose the mini-budget through executive orders, and equated PML-N’s tenure with that of General Pervez Musharraf’s martial law regime. “If the government is bent upon bypassing the Parliament in legislative business then it is better to scrap the parliamentary system and impose martial law,” said PTI’s visibly perturbed Senator Mohsin Aziz.

In its 30-month rule, the PML-N government has promulgated 25 Presidential Ordinances to avoid going to the parliament.

The government has implemented the mini-budget through Statutory Regulatory Orders (SROs) after its first-quarter revenue collection fell short of the target of Rs640 billion.

For the second quarter (October-December), the IMF has given Rs750 billion tax collection target to the FBR.

The accumulative first half (July-December) IMF-determined tax target is Rs1.390 trillion and as of December 15, the FBR collected Rs1.173 trillion.

The Rs1.173 collection was 17% higher than the collection made in the comparative period of the last fiscal year. The FBR needs to collect another Rs218 billion in the last half of this month - on average Rs14.5 billion per day to avoid another shortfall in tax collection.

Mohammad was confident that the current pace of growth was sufficient to achieve the first-half target, therefore there would not be a need for additional tax measures.

However, the chairman said that the Rs3.104 trillion tax collection target was over-stretched. “It is not easy to generate Rs3.1 trillion tax revenues in a single year in Pakistan,” he said.

Officials at the Ministry of Finance said that if the FBR failed to achieve its first half target, new tax measures might have to be taken in February next year.

Senate Standing Committee Chairman Senator Saleem Mandviwalla blamed the Ministry of Finance for setting unrealistic tax targets while Senator Kamil Ali Agha said the government had already started preparations for another mini-budget.

The committee recommended the government to avoid using executive powers to impose taxes in future.

Harassment complaint

Meanwhile, China Harbour Engineering Company (CHEC) Chief Executive Wang Xiaoping claimed that tax authorities were harassing and arm-twisting his company. The CHEC is engaged in infrastructure construction at Gwadar.

Wang further claimed that the Large Taxpayer Unit Karachi started harassing by cancelling exemption certificates from deduction of withholding tax at source.

It then ordered the Karachi Port Trust to withhold Rs2 billion payments on account of arrears of withholding tax of previous three years.

“The FBR is asking us to pay Rs4 billion withholding tax (WHT) on account of 2009 and 2010 tax years,” said Wang. He said on June 29 of this year the FBR forcefully recovered Rs850 million from the company’s bank accounts.

“On November 4, the FBR sent another notice, demanding Rs1.9 billion in tax against the company’s total revenue of Rs6 billion, which is unlawful,” he added.

“The CHEC has never had such kind of serious harassment anywhere in the world”, claimed Wang.

The committee directed the FBR to give a fair hearing to the company and avoid pressurising it.

Published in The Express Tribune, December 17^th, 2015.

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