FBR’s collection slumps 17% in April

Lockdown impacts tax collection; govt also reshuffles top hierarchy of revenue body

Shahbaz Rana May 01, 2020

ISLAMABAD: The tax collection in April slumped 16.5% to only Rs242.5 billion due to partial lockdown in the country as the government also reshuffled the top hierarchy of the Federal Board of Revenue (FBR).

The FBR notified transfers and postings of about 53 officers and at least two of them with serious reputational issues are being given key positions in the field that may not bode well with the image of the Pakistan Tehreek-e-Insaf (PTI) government.

The government has appointed officers with a tainted reputation a week after Prime Minister Imran Khan approved rules for “forced retirement” of civil servants, who have become deadwood. But it seems that the bureaucracy is not listening to the prime minister.

In April, the FBR provisionally collected Rs242.5 billion in taxes, down by Rs48 billion or 16.5% when compared with the collection in the same month of last year. April’s downward-revised tax collection target was Rs426 billion, which the FBR missed by a wide margin of Rs186 billion.

However, the tax targets have become irrelevant due to the fast-changing economic situation in the aftermath of the Covid-19 pandemic that started affecting Pakistan’s economy from the fourth week of March. But the FBR’s performance remained below the benchmark throughout the fiscal year.

From July through April of the current fiscal year, the FBR provisionally collected Rs3.307 trillion. Its collection was Rs908 billion less than the original target.

The government and the International Monetary Fund (IMF) now expect the FBR to collect at least Rs3.9 trillion, which will be slightly higher than the Rs3.83 trillion collected in the last fiscal year.

FBR management is trying to justify its poor performance by hiding behind the Covid-19 situation. The deadly pandemic will dent FBR’s collection in the April-June period. In the pre-Covid-19 situation, the FBR had sustained a shortfall of Rs693 billion. Business activities remained largely suspended in April, which became the reason for the 16.5% dip in revenue collection as compared to Rs290 billion received in the same month of the previous year.

The Rs3.307-trillion collection was higher by 10.4% or Rs312 billion as compared to the same period of the previous fiscal year.

On the insistence of the IMF, the federal government had initially set the FBR’s tax collection target at Rs5.5 trillion or 12.4% of gross domestic product (GDP).

The IMF’s target was unrealistic as it required a 45% growth in the collection from last year’s Rs3.829 trillion. The IMF then forced Pakistan to take unprecedented revenue measures of Rs735 billion.

But now public finances are expected to come under significant pressure. The IMF has projected that the budget deficit is expected to be 9.2% of GDP in this fiscal year due to a decline in tax revenue and an increase in public spending to support the healthcare response to the Covid-19 and social safety nets for the very poor.

However, the IMF expects the budget deficit will improve to some extent and will be around 6.2% of GDP in the next fiscal year, as it has proposed an Rs5.1-trillion tax collection target.

The Rs5.1-trillion target will be 31% higher than the estimated collection in this fiscal year, which will again make it challenging for the FBR to achieve.

The low revenue collection will have serious implications for the country’s debt, which the IMF has now projected to increase to 90% of GDP by June this year.

The World Bank has projected that the gross public debt would further jump in the next fiscal year to 92% of GDP, according to the Ministry of Economic Affairs.

It added volatility in oil prices and difficulty in rolling over bilateral debt from non-traditional donors (China, Saudi Arabia and the UAE) would compound Pakistan’s external risks and contribute to higher financing gaps.

Transfer, postings

The FBR on Thursday issued transfer and posting orders for about 53 officers of the Inland Revenue Service and Customs Group.

The government has posted Nadeem Rizvi as the new Member Inland Revenue Operations – the key post after the chairperson. His predecessor Seema Shakil has not been given any new posting.

Shakil’s new designation is Member FBR stationed in Karachi, but the FBR headquarters is in Islamabad.

Faiz Illahi Memon, who was serving as Chief Commissioner LTU Karachi, has been appointed as new Member Administration FBR.

Bakhtiar Muhammad has been appointed new Member Facilitation and Taxpayers Education. Mohammad Qasim Samad is new Member Taxpayers Audit and Ambreen Iftikhar has been appointed as Member Human Resource Management.

Dr Aftab Imam has been posted as Chief Commissioner RTO Quetta and Ashfaq Ahmad Tunio has been posted as Chief Commissioner LTU Lahore.

Abdul Hameed Memon has been posted as Chief Commissioner LTU Karachi-II and Badruddin Ahmad has been posted as Chief Commissioner LTU Karachi.

The government has also transferred about 36 officers of Pakistan Customs. It has appointed Sarfraz Warraich as new Member Customs Operations.

Zahid Khokhar has been posted as Director General Transit Trade Karachi. Khokhar was earlier serving as Director General Customs Intelligence and Investigation.

Abdul Rashid Shaikh has been appointed as new DG Intelligence and Investigation Customs.

Published in The Express Tribune, May 1st, 2020.

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