New tax collection target to come in a fortnight

Estimates to be based on economic growth, inflation, audit and new taxpayers.

Shahbaz Rana August 05, 2011


Tax officials on Thursday rejected the Rs1,952 billion revenue target and vowed to fix a new one in a fortnight, indicating the possibility of levying new taxes at a time when infighting in the Federal Board of Revenue (FBR) is intensifying.

The Chief Commissioners’ Conference, held here to devise a fresh strategy for the new financial year, decided to prepare estimates based on economic growth, inflation, audit and enforcement and bringing more people into the tax net. A similar strategy failed to give results last year when FBR missed the revenue target by Rs38 billion.

Finance Minister Abdul Hafeez Shaikh was scheduled to address the conference, but he did not turn up.

“At this moment, I do not know what is the tax target, it will be finalised next week by taking input from field formations and that will lead to setting a realistic figure,” said FBR Chairman Salman Siddique while talking to The Express Tribune.

The Revenue Advisory Council had suggested a Rs1,900 billion target for FBR, an advice if accepted at that time could have saved the authorities from embarrassment just few weeks down the line.

The move to abandon the target just after few weeks of the passage of budget in parliament also makes a mockery of the authority of parliament, effectively giving the nation’s fate in the hands of a few bureaucrats. The revision of the tax target may also lead to revision of other budgetary targets.

An official handout of FBR states that estimating revenues is an interactive exercise involving chief commissioners and FBR beginning with the financial year. The chief commissioners will prepare their revenue estimates based on the rate of inflation, economic growth and their efforts in enforcement, demand creation, audit and bringing new taxpayers into the net. These estimates will be reviewed in the FBR headquarters and revenue estimates for the current financial year will be finalised thereafter.

The FBR chairman said Rs131 billion worth of dues and recovery of Rs102 billion paid in illegal sales tax refunds would play a pivotal role in meeting this year’s tax collection target.

However, an insider said that almost half a dozen chief commissioners challenged the headquarters’ assessment of Rs102 billion in illegal refunds. He said the chief commissioners termed it “inflated and exaggerated”.

FBR decided that maximum efforts would be directed towards collection of arrears – a wish that may remain far from reality bearing in mind last year’s results. FBR also decided to monitor progress of withholding agents on a monthly basis.

A chief commissioner said on condition of anonymity that the Inland Revenue Service took a strong exception to a conspiracy hatched by a senior official, who is considered an expert in sales tax affairs, to malign the service by spreading news that IRS would be divided into two wings and a separate member sales tax would be appointed. The chairman clarified that under the reformed structure of FBR, no separate post of member sales tax was under consideration.

The conference also decided to take up the matter of powers of posting and transfers in FBR in a special meeting of the Board-in-Council. Sources said transfers and postings have become another bone of contention between the chairman and the members. The members raised the issue that how could they be assertive when their powers have been snatched.

They said the officials were not happy with the decision to take the matter to the Board-in-Council and argued that when the chairman took away the powers on April 2 he did not obtain the Board-in-Council approval.

Published in The Express Tribune, August 5th, 2011.