Tax refund: Govt bequeaths Rs600b scam to caretakers

Mandviwalla says NAB has been engaged to recover Rs100b from big power defaulters.

March 17, 2013
“We have to recover Rs100billion from private power defaulters and Rs80 billion from the provincial governments in order to reduce the circular debt by Rs180 billion,” says Mandviwala. PHOTO: FILE

The Pakistan Peoples Party-led government has left behind a multibillion tax refund scam – one of the biggest scandals in the Federal Board of Revenue – to be dealt with by its successor interim set-up.

The revelation came a day after Premier Raja Pervaiz Ashraf celebrated the ‘victory of democratic forces’ as the PPP-led coalition government completed its five-year constitutional term.

“The FBR added Rs190 billion as sales tax in the exchequer but then also gave Rs600 billion worth of refunds to influential people which amounts to a big fraud,” Saleem H Mandviwalla, the former finance minister told journalists on Saturday.

“This trickery of over refunds in the FBR was unearthed during my 24-day tenure as finance minister,” he added.

Talking about the tax amnesty scheme, Mandviwalla said it had the potential to bring more taxpayers under the tax net but unfortunately the bill was not passed.

“We need to bring 3 million more people under the tax net,” he said. “The president may issue an ordinance to introduce a tax amnesty scheme for three months to whiten the black money after the dissolution of the National Assembly.”

According to Mandviwala, the FBR is facing a 3.7 per cent revenue shortfall for its total recovery in the ongoing financial year against a 5 per cent shortfall it saw during the last fiscal.

Energy crisis

Mandviwalla also said that electricity supply to big defaulters continues unabated even though they have not paid their bills. The National Accountability Bureau (NAB) has been engaged to recover Rs100 billion from these defaulters, he added.

“Initially, NAB was reluctant to get involved – but they relented after the government has offered them a 10 per cent commission on the recovery of electricity bills,” he said, adding that NAB Chairman Admiral (Retd) Fasih Bokhari has promised results within two weeks.

Mandviwalla added that hydel power generation is expected to go up next month, reducing the cost of power generation. The government had allocated Rs185billion for power subsidy for the ongoing fiscal but the figure has already soared past Rs254 billion.

“We have to recover Rs100billion from private power defaulters and Rs80 billion from the provincial governments in order to reduce the circular debt by Rs180 billion,” he said. The power crisis has crushed the economic growth by 3 per cent, he added. The government would divert Rs105 billion lying with corporations to end the circular debt.

He said the government had injected Rs1.4 trillion into the power sector during its five-year tenure, an amount which was enough to build Diamer Bhasha dam. “The people would have suffered and poverty could have risen if the government had raised power tariff and removed subsidy,” he added.

Mandviwalla further said that the government had focused on development projects and had decided to allocate Rs450 billion for the Public Sector Development Programme (PSDP) for the next financial year against a demand of Rs830 billion by the provinces.

About his brief experience as finance minister, Mandviwalla said, “I faced a lot of pressure from politicians, army and bureaucrats on different assignments during my tenure.”

Published in The Express Tribune, March 18th, 2013.


Younus Ali | 8 years ago | Reply

Rs 600 billion bogus refund fraud is very serious matter that should be fully investigated and money recovered and persons responsible be punished as per law. Rs 600 billion frauds of sales tax refunds is bigger than Rental Power Projects fraud.

Aschraful Makhlooq | 8 years ago | Reply

This is the commencement and see what happens in the future with the caretaker setup and most especially importantly with the elected government and how many corruption scandals and financial and economical scams the next elected government shall face and as usual shall give the same repeated statements and impose heavy taxes and penalties and shall increase expensiveness and increase gas and electricity load shedding as PPP faced and said after taking charge in 2008 that when we took charge we found/got Pakistan dived in the severe financial and economical problems,difficulties and crises.....

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