Only Rs91b collection in May

FBR now has to collect Rs8.3b per day to meet the year’s target.

ISLAMABAD:

Thanks to sluggish growth and inefficient tax machinery, the Federal Board of Revenue (FBR) is left with a task of collecting an average of Rs8.3 billion per day for achieving the tax collection target, as the authorities could only bag Rs91 billion so far in May.

Against the monthly target of Rs157 billion, FBR collected Rs91 billion in taxes, which are less than 60 per cent of the monthly benchmark.

FBR’s top management is still hopeful that it would meet the target but is relying more on recovering arrears. “The target is still achievable as FBR expects to receive Rs20 billion blocked revenues from the Pakistan State Oil,” said Salman Siddique, Chairman Federal Board of Revenue.

For reaching Rs1,588 billion target for the whole year, which has been revised thrice, the tax officials need to collect an average of Rs8.3 billion per day.

For the outgoing fiscal year, the government had given Rs1,667 billion target to the tax machinery that was later revised to Rs1,630 billion, then to Rs1,604 billion and finally to Rs1,588 billion.

Tax experts are still skeptical despite imposition of Rs53 billion worth of new taxes on March 15 through Presidential Orders in a desperate attempt to achieve the target. Any shortfall would have adverse impact on the budget deficit that stood at 4.5 per cent till March - 0.5 per cent or Rs86 billion more than the original target.

Reliance on recovering PSO arrears may not yield desired results, as the company management is not on the same page. “The arrear figure is vague and PSO will only pay the reconciled amount,” said an aide to the PSO spokesperson. FBR is claiming up to Rs27 billion in arrears out of which the company paid Rs7 billion.

Published in The Express Tribune, May 24^th, 2011.