Figure fudging: Government postpones 2012 tax collection planning

Official promises investigation of false reporting of numbers within 72 hours.

ISLAMABAD:

Even as it vows to get to the bottom of the ‘figure fudging’ controversy – where the government admitted to providing incorrect revenue collection numbers for fiscal year 2011 – the finance ministry has postponed a meeting of senior tax collection officials that was meant to formulate a strategy to meet next year’s target.

A senior finance ministry official told a small group of journalists that the government is taking the matter of “incorrect tax figures” very seriously and is determined to find out what happened over the next two to three days before making a final decision, presumably to hold at least some officials accountable.

The ministry appears keen to attempt to restore the government’s tarnished credibility in the eyes of international financial institutions, who have started raising questions about the veracity of official data. The finance ministry’s assertions come just one day after a parliamentary panel cancelled its planned investigation into the matter, allegedly after facing pressure from the chairman of the Federal Board of Revenue (FBR).

FBR Chairman Salman Siddiqui had stunned the nation with a late-night press conference on June 30 where he announced that the government had achieved its revised tax collection target of Rs1,588 billion. Last Friday, however, Siddiqui was forced to admit that the real number was in fact Rs1,550 billion.

The FBR chairman blamed the Inland Revenue Service – the division that deals with income and sales taxes – for misreporting gross sales tax data (which does not include the amount of refunds the government owes taxpayers) as net sales tax data (which subtracts that amount out).

Meanwhile, the distraction from the controversy surrounding last year’s tax numbers appears to be affecting the planning for tax collection in fiscal year 2012. On Wednesday, the FBR postponed the Fourth Chief Commissioners’ Conference that had originally been scheduled for Thursday (today).

This is the second time the conference has been delayed. FBR officials say that the tax collection body’s chairman was too busy dealing with the political fallout of the ‘figure fudging’ controversy to spare time for the conference.

The conference is a meeting of the heads of all regional tax collection offices around the country and was convened to finalise a roadmap for achieving the 2012 tax collection target of Rs1,952 billion. The government was supposed to assign monthly and quarterly targets during the conference.

Officials appear to be falling behind on their revenue collection efforts. The FBR has not yet compiled any preliminary estimates for revenue collection in July. The target for July 2010 had been set at Rs90 billion, just 5.6% of the initial target of Rs1,667 billion for fiscal 2011. The target for July 2011 is expected to fall between the range of Rs110 billion and Rs115 billion.





Published in The Express Tribune, July 28^th, 2011.