Bridging the shortfall: Govt to keep revenue collection target static

The move is surprising despite tax machinery’s inability to meet last year’s objective.

Shahbaz Rana August 27, 2011


In a surprising move, the government has decided to keep the annual collection target unchanged for the time being despite evidence that the tax machinery may remain short of goal between Rs70 and Rs120 billion.

The stasis was surprising in the wake of no additional revenue measures.

The government has also yet to announce expenditure cutbacks, bridging the shortfall and keeping the gap between national income and spending at a reasonable level. The previous collection target was Rs1,952 billion.

“We have reviewed the situation and decided that for the time being there is no need to revise the collection target”, said one of the committee members who took the decision.

The chairman of the Federal Board of Revenue, Salman Siddique, was not available for comments.

Another finance ministry official confirmed the move, but said that the government was considering taking additional revenue measures during the course of the current fiscal year.

After the Federal Board of Revenue confessed that it misreported last year’s collection figure the government had to go back to the drawing board to reset various budget targets, including the one it set for collection. During review exercises, the authorities concluded that without taking additional revenue measures, the FBR may collect between Rs1,830 billion and Rs1,882 billion, depending upon various models.

It was expected that the government would fix the target in the Rs1,850-1,900 billion range. The decision is seen as continuation of the government’s unannounced policy to set unrealistic targets and then revise them just before end of financial years.

Sources in the FBR told The Express Tribune that the authorities decided to keep the target unchanged on the assumption that they would compel 700,000 potential taxpayers to cough up Rs133 billion in arrears. The Chairman FBR is said to have assured the government that this time he would deliver on his promises.

The time may never come again to test the chairman FBR’s claim as he is going to retire in January next year, much before the close of the financial year.

Meanwhile, the FBR on Friday extended the dates for payment of taxes and duties and for filing of sales tax and federal excise duty returns for the month of July. The decision is the outcome of ongoing tussle between the FBR and Sindh Revenue Board on right to collect the tax on services. The FBR has directed the banks and insurance companies to pay federal excise duty while the SRB has contested the claim and pushing banks to instead pay sales tax.

Despite at odds with the FBR the Sindh revenue authorities managed to collect Rs one billion on account of sales tax, said an official of the provincial tax machinery.

The date for payment of taxes has been extended up to August 30 while the date for filing of Sales Tax and Federal Excise Duty returns has been extended up to September 10. This extension of date is for the tax period July 2011, and is applicable to all registered persons.

The FBR has also extended the due dates for filing of Income Tax Returns for the tax year 2011. In a notification issued here, the Inland Revenue Wing of the FBR has announced the following extension in the dates. For filing of returns of total Income statements of final taxation that were due on 31st of August, the date has been extended up to 30th September, 2011.

For filing of returns of total income statements of final taxation that were due on September 30, the date has been extended up to October 31, said the FBR.

Published in The Express Tribune, August 27th, 2011.


Meekal Ahmed | 12 years ago | Reply This is the same old thing that is played out each year for as long as I can remember (and that is a very long time!). Chairman FBR may be due to retire but I would bet my bottom dolllar he will get an extension.
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