FBR forcefully withdraws Rs2b from PRA’s bank accounts

Published: July 6, 2018
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Move a desperate measure to increase tax revenue for 2017-18.
PHOTO:EXPRESS

Move a desperate measure to increase tax revenue for 2017-18. PHOTO:EXPRESS

ISLAMABAD: In its desperate effort to come near the downward revised target, the Federal Board of Revenue (FBR) has forcefully withdrawn about Rs2 billion from Punjab Revenue Authority’s (PRA) bank accounts, setting another example of highhandedness.

The incident took place in Lahore where FBR authorities pressurised the National Bank of Pakistan (NBP) to reverse some transactions of PRA, officials in the FBR headquarter told The Express Tribune. These transactions, involving nearly Rs2 billion, were reversed on June 28 and June 29, officials said.

Punjab’s Finance Secretary Hamid Yaqoob Sheikh confirmed the development.

It has become a routine matter for the FBR to freeze and attack bank accounts of companies and individuals in the crucial month of June to meet its targets. But it has never happened that the tax machinery forcefully withdrew money from accounts of another revenue authority.

For the last fiscal year 2017-18, which ended on June 30, the parliament approved a tax collection target of Rs4.013 trillion. But despite availing bonanza of the tax amnesty scheme, levying massive regulatory duties during the course of the year and taking benefit of higher petroleum products prices, the provisional collection stood at Rs3.841 trillion.

The FBR’s collection fell short of the target by Rs172 billion or 0.5% of the Gross Domestic Product (GDP), increasing prospects of crossing the budget deficit of over Rs2.4 trillion.

The Punjab government would formally take up the issue with the State Bank of Pakistan (SBP) and the federal government, said provincial finance secretary. Sheikh maintained that such acts were not welcomed, as both the departments could have resolved the issue amicably.

The Punjab government was of the view that the money belonged to the provincial authority but even if there was a dispute, there was no justification of moving without PRA’s permission, said Sheikh.

But officials in the FBR claimed that about Rs2 billion had been deposited in the NBP branch on account of sales tax on goods, which was FBR’s subject. They said that the NBP erroneously credited about Rs2 billion into the accounts of PRA. The FBR only reversed these transactions, they added.

Even if the money was erroneously credited into the PRA’s accounts, this cannot be taken out without the consent of the account holder, said Sheikh. He said that the provincial government believed that the money belonged to it.

The NBP was forced to reverse these transactions, which is also against banking rules, said the finance secretary of Punjab. He said that the Punjab government has long been encouraging the FBR to reconcile its books with the PRA. Sheikh said that FBR owed billions of rupees to the PRA for several years but the federal government department was not ready to sit with the provincial authority.

The provincial finance secretary demanded that the FBR should return its money and also rely on information technology to avoid occurrence of such incidents.

After the 18th Amendment in the Constitution, sales tax on services is a provincial subject.

The PRA wanted that the FBR should use STIRVE software, a real-time sales tax invoice verification system that also focuses entirely on denying bogus claims of input sales taxes. The FBR did not agree.

The PRA has also been urging the FBR to consolidate the databank of the taxpayers aimed at avoiding double counting of transactions and the taxpayers. However, the FBR, which in the last one year has become a hub of secrecy, has never agreed to such proposals aimed at ensuring transparency.

Instead of putting its house in order, the previous FBR management further moved away from transparency. In order to stop the flow of information, the access to the FBR’s revenue collection database was restricted to less than six people. The FBR also did not publish its quarterly reviews of revenue performance for fiscal year 2017-18 and year book of 2016-17.

Published in The Express Tribune, July 6th, 2018.

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