Unless the flood tax is collected, Sindh’s rehabilitation might ebb away

Most district officers ignored the president’s orders to collect the 15% levy on payable income tax last year.

KARACHI:

The bubble of the much-talked about “flood surcharge” burst as quickly as it came up. An auditor general report for the fiscal year 2011-12 reveals that most officials in Sindh either did not bother to deduct the one-time levy or misappropriated the amount they collected.

After two consecutive years of flooding in Sindh, the president decided that a flood surcharge would be levied. This was given legal cover through an ordinance on March 15, 2011. It came to 15% on payable income tax to be deposited with the federal treasury. The money was supposed to be spent on helping floor survivors get back on their feet.

This work was supposed to be done from March 15 to June 30 last year. However, most bureaucrats and district officials either ignored the task altogether or took the money.

The worst cases emerged from Tharparkar where roads and buildings district officers paid Rs119 million and Rs87 million to suppliers, but failed to deduct the flood surcharge worth Rs1.86 million from the bills.

In Naushero Feroze, buildings and education works officers spent Rs18 million during the year 2010-11. While the income tax was collected from the suppliers, the 15% surcharge amounting to Rs166,430 was not deducted, according to the audit report. The district management did not respond to questioning.

In Tando Muhammad Khan, the roads, works and buildings officers did not deduct Rs645,920 as the flood surcharge. When asked why not, the buildings officer told auditors that the tax would be collected from next year.

Roads officials blamed the timing of the ordinance on their failure to collect the money. The works department claimed it had deposited the money but there were no receipts to prove this.

In Sukkur, officials responsible for education, works and services and road spent Rs38 million and deducted Rs2.3 million in income tax from contractors and suppliers. But they failed to collect the Rs0.3 million flood tax on the same amount.

The district education officer did not even collect Rs90,000 in professional taxes from the contractors during the 2010-11 fiscal year. While officials claimed to have received the amount, they could not submit any papers to prove it, despite repeated reminders from the auditors.

It was much the same in Dadu, where road officials showed Rs3.2 million as collected in income taxes from some contractors. When asked by the auditors about the flood surcharge (Rs0.49 million), their reply was: “The amount would be recovered.”

The situation in Matiari was even worse. The officials not only avoided collecting the flood surcharge (Rs352,973) from income tax payers, they even did not collect Rs575,419 in income taxes.

During 2010-11, the district administration paid around Rs11.6 million to contractors and suppliers from whom income tax was not recovered. Similarly, the Matiari DCO spent Rs1.425 million but withholding sales tax amounting to Rs210,744 was not collected from suppliers.

In Badin, the DCO and the Civil hospital medical superintendent paid Rs10.3 million to various suppliers but the income tax amount of Rs330,362 was not collected. The audit team held the district officials responsible for the failure to collect government revenues.

Published in The Express Tribune, October 19^th, 2012.