FBR falls Rs318bn short of achieving tax target

Published: March 31, 2019
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Representational image. PHOTO: REUTERS

Representational image. PHOTO: REUTERS

ISLAMABAD: The Federal Board of Revenue (FBR) has missed its first nine-month tax collection target by a record Rs318 billion amid weakening political support that has left it in a lurch besides contributing to its already dismal performance.

From July to March of this fiscal year, the FBR provisionally collected Rs2.7 trillion in taxes against its Rs3 trillion target, according to the officials of the tax-collection body.

The collection may jump by a few more billions once the final collection figures are available by next week.

Overall, the nine-month tax collection was higher by just Rs53 billion or two per cent as compared to the previous fiscal. The FBR had collected Rs2.628 trillion during the same period in the previous fiscal year, as per the State Bank of Pakistan data.

The nine-month collection is equal to 61 per cent of the annual downward revised target of Rs4.4 trillion.

Finance Minister Asad Umar had told the International Monetary Fund that the FBR may pool Rs4.1 trillion. Apparently, that will be an uphill task now.

The FBR has provisionally suffered a shortfall of Rs81 billion in March alone. It could collect only Rs351 billion against the monthly target of Rs432 billion, according to FBR officials.

The collection in March was Rs19 billion or 5.1 per cent less than that in March last year.

This is for the first time in this fiscal year that the customs duties’ monthly collection target has been missed.

By the end of February, the customs department showed a 20 per cent growth in revenue collection. Against the monthly target of Rs72.8 billion, the FBR provisionally collected only Rs59 billion in customs duties in March.

The shortfall in customs duties was caused by the compression of imports to curtail the current account deficit. The overall nine-month growth in customs duties was 18 per cent.

However, the FBR has managed to bring 1.8 million income tax return filers in its fold, as the extended deadline for filing returns for the tax year 2018 ends on Sunday.

The FBR had recently given a technical extension to bring in the fold nearly 160,000 people who were left out because of a legal amendment.

The income tax law bars including the names of those who filed returns after the due date – Dec 15, 2018 — in the active taxpayers list.

 

The challenges

Apart from the slowing down of the economy and changes in tax policies, the reducing political support has not only demoralised the FBR but also contributed to widening the shortfall, sources in the bureau claimed.

In March, the FBR had frozen the bank accounts of politically influential people hoping to recover Rs9 billion in taxes. However, it had to unfreeze the accounts on the government’s instructions, the sources added.

Hammad Azhar, the minister of state for revenue, denied having any knowledge of the freezing or unfreezing of these bank accounts, maintaining that it was an administrative matter.

Dr Hamid Ateeq Sarwar, the official spokesperson for the FBR, insisted that these accounts were not unfrozen under political pressure.

“Sometimes the bank accounts are erroneously attached that we unfreeze after learning the complete facts of the case,” he added.

The Lahore police had registered a criminal case against some office-bearers of the Lahore Chamber of Commerce and Industry on charges of creating a law and order situation after a tax raid.

The sources said the name of an office-bearer had been withdrawn from the case on the FBR’s request.

But Dr Sarwar insisted that the officer-bearer was only present at the protest to pacify the rioters. He added that he did not have any role in the incident and the police registered the FIR on their own.

When contacted, the office-bearer told The Express Tribune that the government would have to find a permanent solution to eliminate black money from the economy before conducting raids.

“Laws and rules like declaring sale and purchase of properties at below market rates create black money and the businessmen shouldn’t be blamed for that,” he added.

FBR Chairman Jehanzeb Khan has already announced an end to such raids after the business community raised its concerns.

This is not for the first time that the Pakistan Tehreek-e-Insaf (PTI) government has interfered and stopped the FBR from proceeding against influential people.

In January this year, the FBR was stopped from moving against a company that was linked with a member of the National Assembly belonging to the PTI, highly-placed sources told The Express Tribune.

The FBR had traced a payment that an event organiser company made to settle an election campaign related bill.

The FBR’s collection has also been affected by the non-payment of tax dues by power distribution companies because of the chronic circular debt. The Pakistan International Airlines has also not been making payments for last three months, according to FBR officials.

The FBR spokesperson had said this week that the tax machinery was suffering losses due to the low tax rates on the petroleum products, the reduction in individuals’ income tax rates, the lower collection of withholding tax on financial transaction and mobile cards and the drop in import duties.

The FBR’s collection has also suffered because of the reduced development spending releases by the federal and provincial governments.

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Reader Comments (2)

  • H.A.Khan
    Mar 31, 2019 - 3:33PM

    FBR is becoming a disaster for the country.

    May be time has come to change the entire senior team of FBR before it is too lateRecommend

  • Farooq
    Mar 31, 2019 - 6:08PM

    the FBR provisionally collected Rs2.7 trillion in taxes against its Rs3 trillion target
    so this is 90% of target which could have been a good headline but Tribune as always has to remain negative about PakistanRecommend

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