Govt makes changes at FBR’s top level as tax shortfall widens

Tax receipts stand at Rs1.38tr in Jul-Nov, falling short of target by Rs110b

ISLAMABAD: The federal government on Friday made changes at the top level in the Federal Board of Revenue (FBR) after the tax collecting organisation failed to come up to expectations and the revenue shortfall exceeded Rs110 billion.

It posted five senior officers out of the FBR and placed them in various ministries under Section 10 of the Civil Servants Act 1973. Two of them were grade-22 officers and three were in grade-21.

The government also transferred Member Income Tax Policy Dr Mohammad Iqbal and posted him as senior joint secretary in the Ministry of Industries.

Member Inland Revenue Operations Habibullah Khan was appointed senior joint secretary in the Ministry of Science and Technology whereas Khawaja Adnan Zaheer, Member Information Technology, was appointed Director General Wafaqi Mohtasib Lahore.

Member Administration Tasneem Rehman, a grade-22 officer, was appointed DG Pakistan Institute of Trade and Development. Nadeem Dar, also a grade-22 officer, who was serving as Member Human Resources, was appointed Member Federal Land Commission.

The FBR also notified the establishment of the Directorate General of Immovable Properties, which was earlier opposed by its top officials. Tanvir Akhtar was given the additional charge of DG Immoveable Properties.

The FBR could provisionally collect only Rs1.38 trillion in taxes in first five months of the current fiscal year against the target of Rs1.5 trillion till Friday evening, according to FBR officials. The receipts will go up slightly when figures are finalised for November.

It also received only 1.17-million income tax returns by the end of the extended deadline of November 30, forcing the government to give a 15-day extension to December 15.

The Rs1.38-trillion tax collection in July-November FY19 was Rs75 billion or 5.8% higher than the receipts in the same period of previous fiscal year. But the collection fell short of the desired pace. Since the FBR has not yet announced monthly revised targets, the Rs1.38-trillion collection was short of the original goal by at least Rs110 billion.

Only in November, the tax collection fell short of the target by Rs35 billion, according to sources in the FBR. In the month, the collection stood at Rs278 billion, merely Rs6 billion or 2.2% higher than November 2017. The monthly target was Rs313 billion.

In July-November of the last fiscal year, the FBR had collected Rs1.3 trillion.



A less than 6% growth in revenues has started worrying the finance minister as it is even lower than the projected nominal gross domestic product (GDP - economic growth plus inflation) expansion of 12%.

"There is a need to make administrative changes in the FBR and the matter will not be solved with the change of just one person," said Finance Minister Asad Umar on Friday while responding to a question. "These changes will be made by Monday."

Umar said there were complaints that the IRIS system of the FBR, which receives income tax returns, crashed on Friday. He urged Minister of State for Revenue Hammad Azhar to extend the return-filing deadline.



However, the FBR officials said the system was working smoothly and the FBR received nearly 50,000 returns till 7 pm on Friday.

Till the end of November, the FBR received nearly 1.17 million returns, up around 200,000 or 20% over November 2017. But the number was still nearly 300,000 less than the people who were on the Active Taxpayers List.

The authorities said in order to keep the system working, the FBR increased the bandwidth and added many servers and new virtual machines. Azhar said next year the FBR would shift to another system in an attempt to avoid malfunctioning complaints.

In September, the country's parliament approved a mini-budget and reduced the FBR's annual tax collection target by Rs37 billion to Rs4.398 trillion. The FBR had hoped that since the government had notified new tax measures in the mini-budget, there would not be any shortfall.

Against nearly 64 types of withholding taxes, the FBR sustained a negative growth in two-dozen taxes in July-November FY19. Withholding tax collection on imports, salaried persons, dividend income, technical fee and contracts dropped massively.

Similarly, there was also reduction in the withholding tax collection on pension funds, registration of new cars, commission income, stock exchange, steel melters, telephone bills, cable operators, insurance premium and property purchase.

Published in The Express Tribune, December 1^st, 2018.

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