The Federal Board of Revenue (FBR) has decided to dole out cash among its people to celebrate the achievement of the first-quarter tax collection target amid the International Monetary Fund’s (IMF) skepticism about the sustainability of import-dependent revenues.
The FBR decided to give cash to Inland Revenue Service (IRS) officers despite the fact that there was a reduction in the collection of taxes due to officers’ own efforts during the July-September quarter, sources in the FBR told The Express Tribune.
Not only that, more than half of the tax collection during the first quarter was at the import stage, which was automatic, according to the FBR statistics.
On Tuesday, the FBR headquarters directed its field formations to submit “recommendations for reward for meritorious services in respect of BPS (basic pay scale) 01-22 officers and officials of Inland Revenue for the first quarter of the financial year 2021-22,” showed the FBR documents.
The Express Tribune requested FBR spokesman Dr Asad Tahir to comment on the development but he opted not to reply.
The FBR’s move seems unusual as it has decided to distribute cash not only at the beginning of the fiscal year but also just three months after it gave up to six salaries to its employees in June in rewards and honorariums.
In June 2021, a proposal had also been floated to give up to 15 salaries in cash rewards to one of FBR’s wings but this did not pass through the approval stage.
The FBR headquarters gave only one day to its field formations for giving recommendations for the processing of rewards for meritorious services and set the deadline of Wednesday.
The FBR asked the field formations to nominate 30% officers as excellent to make them eligible for the maximum cash reward, another 50% as very good, and the remaining 20% as good.
During the first quarter of the current fiscal year, the FBR collected nearly Rs1.4 trillion in taxes but just Rs481 billion, or 34.4%, was the income tax collection.
Almost the entire income tax collection was either on account of withholding tax or the advance income tax paid by companies and individuals, the sources said.
The Express Tribune asked the FBR spokesman to share how much of the first quarter tax collection was on account of current and past demands that were raised by the FBR officers and the actual recoveries against those demands that could be deemed as collection by the efforts of FBR employees. However, Tahir did not reply.
Sources said that during the first quarter, hardly Rs3 billion had been collected due to the efforts made by FBR officials and the sum was less than half of what the FBR officers had secured through their efforts during the same period of last fiscal year.
Out of the nearly Rs1.4 trillion collection, about Rs718 billion, or over 51%, had been generated at the import stage, which was also a matter of concern for the IMF during technical-level talks.
The FBR showed 44% growth in sales tax collection in the July-September period due to heavy reliance on import taxes. It collected Rs624 billion in sales tax in three months, up by Rs190 billion.
However, nearly the entire increase came at the import stage as the domestic sales tax collection remained almost flat.
The FBR collected Rs200 billion in domestic general sales tax (GST) compared with Rs198 billion last year, after adjusting for refunds. Contrary to that, GST collection at the import stage stood at Rs424 billion in the first quarter of FY22 against Rs236 billion last year, an increase of Rs188 billion, or 80%.
Due to the same reason coupled with a reduction in the petroleum levy collection, the IMF has demanded the imposition of over Rs525 billion worth of additional taxes with immediate effect. The mini-budget issue is now expected to be discussed between the finance minister and the IMF managing director in Washington on Friday.
The FBR spokesman did not reply to the question about contribution of IRS to the total tax collection.
In June last year, the FBR had stopped disbursement of performance reward to thousands of employees after one of its chief commissioners paid three-year salaries in reward to the handpicked people. The FBR had then promised to investigate the matter but subsequently the issue was put under the carpet.
Published in The Express Tribune, October 14th, 2021.
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