Against all odds: FBR surpasses tax collection target in May

Annual target of Rs1,588b now seems easy to achieve.

ISLAMABAD:

Tax officials have claimed that they have surpassed the monthly revenue collection target by five per cent, making the annual target comparatively easy to reach by collecting Rs278 billion in one month.

According to the Federal Board of Revenue (FBR), tax collection in May increased by 5.1 per cent to Rs160.6 billion compared to the target of Rs152.8 billion. Compared to the same month last year, the FBR achieved a growth of 15.3 per cent as revenue collection rose by Rs50 billion.

Still the revenue growth is below the nominal Gross Domestic Product (GDP) growth of 17.4 per cent (15 per cent inflation plus 2.4 per cent GDP). Any growth above the nominal GDP growth indicates the extra efforts put in by the tax authorities. So far, Rs1,310.4 billion has been collected in taxes in 11 months.

Parliament had approved a tax target of Rs1,667 billion for the FBR, which was later brought down to Rs1,630 billion, then to Rs1,604 billion and finally to Rs1,588 billion. To achieve this, the FBR needs to collect Rs278 billion in June or an average of Rs9.2 billion per day.

The collection of Rs160.6 billion in May seems ‘astonishing’ as by 30th of the month the FBR had collected Rs131.7 billion and in a single day Rs29 billion collection is ‘remarkable’. FBR officials argue that the unprecedented collection was a result of measures that compelled the under-filers to pay due taxes. Only in the banking sector, the authorities pointed to Rs19.1 billion in additional taxes.

“The FBR paid Rs8 billion in refunds in May, even then it managed to cross the monthly target,” said FBR Chairman Salman Siddique.

Break-up of tax collection

According to official data, direct tax collection stood at Rs479.2 billion in 11 months against a target of Rs487.9 billion, which was 36.5 per cent of total collection. In May alone, the FBR collected Rs47.9 billion in direct taxes against the target of Rs56.6 billion.

On account of sales tax, Rs552.4 billion was collected in 11 months, which was Rs9 billion more than the target. In May, collection stood at Rs77.5 billion against the target of Rs67 billion.

In 11 months, the FBR collected Rs119.6 billion on account of federal excise duty against the target of Rs115.2 billion. In May, the excise duty collection stood at Rs17.5 billion against the target of Rs13 billion.

On account of customs duties, the FBR bagged Rs159.1 billion in 11 months against the target of Rs157.6 billion. In May, the collection under this head stood at Rs17.7 billion against the target of Rs16.3 billion.

Published in The Express Tribune, June 2^nd, 2011.