ISLAMABAD: The Federal Board of Revenue (FBR) has failed to achieve a modest monthly revenue target and collected Rs278 billion in July, marking a discouraging start to the new fiscal year as it has to collect a whopping Rs5.5 trillion in the entire year.
Against the monthly target of Rs291.5 billion, the FBR provisionally collected nearly Rs278 billion in taxes, missing the relatively easy monthly target by Rs14 billion, according to FBR sources.
The Rs278-billion collection was inclusive of Rs14 billion of the tax amnesty scheme, said sources in the FBR.
The monthly collection was Rs27 billion or 10.6% higher than the same period of previous fiscal year. However, it fell short of the needed growth rate of 16% to achieve the monthly target of Rs291.5 billion.
Initially, the FBR wanted to fix the July target at Rs310 billion but decided to lower it due to a slow start to the fiscal year. The collection may go up by a couple of billions of rupees, once the figures are reconciled.
Out of the Rs278 billion, the customs duty collection stood at Rs47 billion, registering a negative growth of 7% over the same month of last year.
The International Monetary Fund (IMF) has given Rs5.503-trillion annual tax collection target to the FBR. The tax machinery requires 45% growth to achieve the target as the FBR closed the last fiscal year with collection of Rs3.820 trillion. In its history, the FBR has achieved maximum annual growth of 21% in any fiscal year.
The government was contemplating bringing administrative changes at the top level in the FBR but it put off the decision temporarily. Prime Minister Imran Khan twice postponed a scheduled meeting with the top FBR hierarchy.
The shortfall in monthly revenue collection will be a challenge for the government of Imran Khan who has declared tax collection his top priority.
The Rs278-billion collection is only 5% of the annual target of Rs5.5 trillion. The revenue collection target is the lynchpin of the IMF programme and the government’s inability to achieve quarterly targets could result in introduction of a mini-budget.
The FBR has missed the first month target despite the fact that it has imposed a record Rs733.4 billion in additional taxes in the budget. Majority of these taxes are indirect in nature, yet the FBR has struggled to achieve monthly sales tax and customs duty targets.
The most aggressive and inflationary taxation measure was the decision to impose 17% sales tax at the manufacturing stage of textile, leather, carpets, sports and surgical goods. But against the monthly target of Rs128 billion, the FBR could collect Rs123 billion on account of sales tax.
The collection was up by nearly 26%, reflecting the impact of levy of sales tax on almost all consumer and durable goods in the budget.
The FBR collected around Rs97 billion on account of income tax, which was short of the monthly goal and was almost at last year’s level. The FBR managed to achieve its federal excise duty target of Rs11 billion.
But the adverse impact of import compression policies continued in July as well. The tax machinery collected Rs47 billion in customs duty against the target of Rs55 billion. Import of dutiable goods declined 22% and there was nearly 28% reduction in goods declarations.
The IMF has set the first-quarter (Jul-Sept) revenue target at Rs1.070 trillion and it will review the progress in first review of the $6.2-billion loan programme likely to be held in November or December.
The FBR on Wednesday also notified a new Directorate General of Anti-Benami Assets Initiative. It gave the additional charge of Director General to Asim Ahmad, who is currently posted as Director General, Directorate General of Intelligence & Investigation (Inland Revenue).
The FBR office order noted that Benami transactions, entailing the phenomenon of Benami moveable and immoveable properties, bank accounts, luxury vehicles, offshore investments and stocks and shares, are one of the biggest economic and financial threats, currently camouflaging rampant corruption in society, deadly confronting Pakistan’s taxation system and practically compromising economic viability of the country.
Due to the non-existence of a special law and Benami rules, all anti-corruption agencies have so far failed in tracing and documenting the real/beneficial owners and criminals went scot-free, it added.
Under the Benami Act, the FBR will administer two distinct streams of functions for this white collar crime investigation agency, independent authorities and supporting administrative oversight.
The DG of Anti-Benami Initiative would act as FBR’s focal office for proper implementation of Benami Transaction (Prohibition) Act 2017. The DG would also act as a bridge between Anti-Benami Zones and FBR, between zones and adjudication authorities and among all the Anti-Benami Zones as well.
Published in The Express Tribune, August 1st, 2019.