ISLAMABAD:
Tax authorities have surpassed the quarterly target with the help of excessive indirect taxation but experts have questioned the mismatch in the growth rates of sales tax at import stage and customs duties.
The Federal Board of Revenue (FBR) upped its game by collecting Rs373.8 billion during July to September which is Rs80.3 billion or 27.4% more than the collection in the same period of the last year. The amount is Rs10 billion more than the quarterly target of Rs363.4 billion.
The FBR has an ambitious annual target of Rs1,952 billion and with Rs373.8 billion in the bag, it has achieved 19.1 per cent of the annual target.
The figures show that Rs122.2 billion has been collected on account of income tax which is less than one-third of the total collection, indicating over reliance on indirect taxes. Under the head of income tax almost 60 per cent collection is usually on account of withholding taxes which experts argue is an indirect tax but the FBR counts it part of direct taxes.
Experts smell massive evasion
The Federal Board of Revenue bagged Rs180.4 billion in sales tax during three months, showing an impressive growth of almost 35 per cent.
Within the sales tax, domestic stage collection rose just 9.4 per cent to Rs76.2 billion, which is much lower than nominal growth in the economy.
Tax experts say that when nominal Gross Domestic Product – inflation plus economic growth – is growing at a pace of over 15 per cent, then below ten per cent growth rate at domestic stage indicates signs of massive evasion.
On the other hand, the FBR generated Rs104.2 billion at import stage, showing a growth rate of 63 per cent in the same period last year.
They added that collection growth at import stage of that 63 per cent was astonishing as customs duties collection grew less than 15 per cent in the same period.
Customs duties’ collection rose 14.4 per cent to Rs42.5 billion during the quarter, according to data released by FBR.
FBR Chairman Salman Siddique was not available for comments.
The authorities’ credibility suffered a major setback following the recent figure fudging fiasco. On July 6, the FBR had obtained Rs42 billion advances to cover-up shortfall in tax collection target for fiscal 2011 even after revising it three times. Later on, the government transferred 30 senior officials but retained FBR Chairman and his right hand Chief Commissioner Large Taxpayer Unit Islamabad who obtained Rs18 billion advances.
On account of excise duty, the FBR collected Rs28.7 billion during the first quarter that was Rs1.8 billion or 6.7 per cent more than the last year’s collection. The collection at import stage plunged 44 per cent due to abolishment of many duties in the budget. Domestic stage collection increased 15.3 per cent in the first quarter.
Monthly collection
In September alone, collection rose 26 per cent to Rs145 billion in taxes on a yearly basis. The FBR bagged Rs62.4 billion on account of income tax, showing a growth of 21 per cent.
However, excise duties collection dropped by Rs339 million or 3.6 per cent mainly due to negative growth at import stage. The FBR collected Rs8.95 billion in excise duties while customs duties collection stood at Rs16.4 billion and sales tax at Rs57.4 billion.
Published in The Express Tribune, October 5th, 2011.
COMMENTS (4)
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I also want a job in FBR. I failed twice in FA. Could not study further. If the worthy MPA of my my area can arrange a fake BA degree, why cant i. Degree to degree hoti hay . Asli ho ya naqli.
i want this job sir i done inter computer science and arts both i done c.i.t diploma computer information tachnology d.a.e diploma essociate engeneering and doing b.com this is my cell no 03026278647 plz contact me
@Meekal: I agree with your conclusion: "Long live the cooks and crooks of the FBR".
More and more the thinking amongst serious professionals in FBR and outside is Chairman FBR is the problem not the solution. He primarily was responsible for attempting to get tax on 3 July and account it on 30 June.What he is trying to do is shift the blame to field units who followed the procedure agreed in 5th Chief Commissioner's conference held in Sep 2010 ie report gross tax collection.
FBR cannot continue to hold back refunds of tax payers in an environment where borrowing cost is over 17% and claim that they are meeting the tax collection targets. FBR keeps on changing goal post to show that it is collecting taxes as budgeted. Business are sick and tired of stuck up refunds and attitude of FBR lead by the present Chairman
I think Chairman FBR should stay low and out-of-sight before he makes (another) boo-boo. That would surely dash his fervent hopes for an extension.
Nominal GDP is growing by around 15% as suggested. We should expect, nay demand, that total tax revenues should grow by at least that much suggesting a tax buoyancy of unity. If it is above one, so much the better.
Of course these tax revenue figures are always suspect because FBR has ZERO credebility. With no IMF around breathing heavily down our necks and only an Article IV consultation to be undertaken as part of our obligations of IMF membership, FBR must be having a field day cooking away!
Long live the cooks and crooks of the FBR.