The Federal Board of Revenue once again assigned apparently unrealistic tax collection targets to its field formations without announcing new tax measures which are essential if they want to achieve the ambitious year-end goal.
In first Chief Commissioners Conference, held after the recent shakeup in the FBR, the Inland Revenue Service was asked to collect Rs1,737 billion in taxes till June 30 next year. This amount is almost 90 per cent of the total annual target. The remaining amount of Rs215 will be collected by the Customs department. This brings the total target for the year to Rs1,952 billion.
These targets have been assigned despite a recent assessment of the Revenue Performance Group, constituted by the finance minister, that with existing revenue measures the FBR can collect a maximum of Rs1,830 billion to Rs1,870 billion.
For the first quarter of the current fiscal (July-September) the IRS has been tasked to collect Rs320 billion. The wing has already collected Rs190 billion in two months and it needs to generate another Rs130 billion at a time when Karachi - the commercial capital of the country, is affected by violence and natural calamities.
During a recent meeting of the National Assembly Standing Committee on Finance Chairman FBR Salman Siddique had said that the FBR would collect Rs90 billion “through administrative measures” to achieve the annual target - a strategy that has been criticised by the tax experts by taking into account last year’s performance of the FBR.
During the past years the setting of unrealistic tax targets has led to missing of the budget deficit target, putting unnecessary pressure on the economic managers to deliver on these numbers. For the past three years the government has been missing both the revenue and budget deficit targets.
An official of the IRS said that during the conference the Headquarter asked the field formations to plug loopholes and stop illegal refund payments. He said the Chief Commissioners were asked to expedite the post refund audit. The focus should be on broadening of tax base, he added.
The official spokesperson of the FBR, Riffat Shaheen Qazi said that unlike in the past, the FBR has assigned “fluid targets” to the field formations which are based on potential rather than percentage increases. She said internal audit and investigation would be strengthened and special focus will be given on withholding tax monitoring with particular emphasis on the banking sector.
Published in The Express Tribune, September 14th, 2011.
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