As an afterthought on the first day of the new fiscal year, the Federal Board of Revenue (FBR) has sought for a downward revision of the new tax collection target set at Rs2.381 trillion.
Senior officials want tax on services taken out from the collection target for it being now a provincial subject, sources in the FBR said.
In a bid to avoid missing the target like last year due to a low base impact, officials have also sought a significant reduction in the amount to be collected.
The likely revision exposes a lack of planning by economic managers who kept the FBR out of the loop when the tax target was being determined. Any downward revision will also affect the budget as it will widen the recently approved deficit target: 5% of the total size of the economy.
The demand comes after the FBR failed to achieve last year’s tax target of Rs1.952 trillion. Sources said that the FBR has sought to divide the Rs2.381 trillion collection target between the FBR, Sindh Revenue Board and the newly established Punjab Revenue Authority.
The amount of Rs2.381 trillion for tax collection had been set on the basis of the Rs1.952 trillion anticipated collection for the fiscal year ended on June 30. However, according to provisional figures, the authorities managed to collect only Rs1.884 trillion which was achieved only after refunds were blocked.
The demand comes after the FBR’s move to show SRB’s revenues as its own collection backfired - an act termed “unlawful” by tax and constitutional experts. Sources said that after it became apparent the authorities would miss last year’s target of Rs1.952 trillion by a wide margin the Finance Ministry asked the FBR to also show SRB’s revenues as its own.
According to the latest provisional collection figures, the FBR has collected Rs1.884 trillion, Rs68 billion less than the amount set. However, the federal government insisted showing the Rs25 billon collected by the SRB as federal collection. By adding this figure, the provisional collection comes to Rs1.909 trillion.
A senior FBR official, while speaking on condition of anonymity, told The Express Tribune that the Finance Ministry has imposed a Rs2.381 trillion target on the tax machinery. “The FBR should have been part of the consultation process, as eventually we are blamed in case of any likely shortfall”, he added.
He further said that the FBR had sought Rs2.338 trillion target for the new fiscal year but the economic managers increased the threshold by another Rs43 billion without their consent.
An insider told The Express Tribune that after the FBR saw imminent failure; the top management posted Asrar Rauf as Director General Operations South- an official who was transferred after his role was established in fudging last year’s tax figures. The man was deputed on June 28, just two days before the fiscal year ended, to repeat last year’s episode of getting advances from state owned enterprises and banks to artificially bridge the shortfall.
Within hours the FBR withdrew the notification of Rauf’s appointment, fearing reaction from all quarters concerned.
Published in The Express Tribune, July 3rd, 2012.