PESHAWAR: The Khyber-Pakhtunkhwa (K-P) government has missed its tax collection target by almost 50 per cent or Rs24.5 billion for the fiscal year 2016-17 (FY17).
The K-P government had set tax and non-tax revenue target at Rs49.4 billion for FY17, but managed to collect only Rs24.9 billion, according to the white paper of the budget.
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The tax receipts target of Rs18.17 billion was missed by 25 per cent or Rs4.57 billion with a collection of Rs13.6 billion. However, the non-tax receipts collection suffered the most as the K-P government generated only Rs11.3 billion against the target of Rs31.33 billion, showing a major shortfall of Rs20 billion or 64 per cent.
The breakdown of the revenue collection of various government departments and agencies shows that the K-P Forest Department was given the target of Rs6 billion, but it could only secure Rs0.5 billion, reflecting a gap of Rs5.5 billion or 92 per cent.
Sources in the K-P Finance Department said that the provincial government had been trying for the past two fiscal years to sell timber stocked in its warehouses to meet the revenue target, but failed to do so, which is why it has been omitted in the FY17’s budget.
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Similarly, the housing sector failed to achieve the target of Rs12.9 billion for FY17 as only Rs0.1 billion was collected with a shortfall of 99 per cent. The government wanted the housing department to commercialise government-owned properties and land to generate revenue, but the task could not be achieved as it faced severe criticism. The target has now been included in the current budget again but, according to sources, there seems no progress in it.
The excise and taxation department was tasked to collect Rs4.4 billion, but it could only get Rs2.3 billion, showing a gap of Rs2.1 billion. The reason for the shortfall is said to be lower than anticipated property and wealth tax collection, Tobacco Development Cess and Infrastructure Development Cess.
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The K-P Energy and Power Department also missed by Rs2.5 billion or 60 per cent its target of Rs4.2 billion, collecting only Rs1.7 billion. The K-P Board of Revenue collected Rs2.7 billion against its target of Rs3.3 billion, revealing a shortfall of Rs0.7 billion or 18 per cent. Similarly, the irrigation department witnessed a gap of 44 per cent or Rs248 million to collect Rs311.7 million as against the target of Rs559.7 million.
The industries and technical education department was supposed to collect Rs258.3 million, but it gathered Rs170.6 million, revealing a shortage of 40 per cent or Rs87.7 million.
Even a downward revised tax collection target is set to be missed
Ironically, the K-P government has again fixed the revenue collection target at Rs45.2 billion for the FY 2017-18, which includes Rs22.3 billion from tax resources and Rs22.9 billion from non-tax receipts.
The rest of the departments and sectors—though they make a little portion of the total revenue target—performed well as they not only achieved their targets, but also surpassed expectations.
The outperformers include the home department, the police department, and the sports, culture and tourism department.
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The home department exceeded expectations by collecting Rs558.8 million, which is Rs161 million or 66 per cent more than the actual target of Rs337 million. Generating revenue through traffic fines and driving licences, the police department collected Rs1.4 billion, which is Rs20 million or 17 per cent more than the target of Rs1.2 billion. The sports, culture and tourism department collected Rs50 million against its targeted Rs28 million, showing an increase of Rs22 million or 44 per cent.
When asked about the dismal performance of the province in collecting revenue, officials of the K-P Finance Department told that the department has created working groups for the mobilisation of revenue-collecting departments and agencies. “We are establishing a Tax Management Unit for the capacity building and training of the staff of the tax-collecting agencies and sectors of the government,” said an official of the K-P Finance Department, requesting not to be named as he was not permitted to talk to the media.
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Admitting that the K-P government’s performance was miserable in FY17, the official said that they need to improve their own revenue-collection mechanism as the province is more than 90 per cent dependent on the federal government for revenue. “Whenever the federal government delays payments we start shouting. The only solution is we strengthen our own revenue generation and utilise potentials appropriately,” the official said, adding that they are under immense pressure from the World Bank to implement its reforms in the tax collection system.