Thorough ineptitude marks FBR’s performance so far this year. DESIGN: ESSA MALIK
Tax collection plunged 4.3% to a mere Rs174 billion in the previous month, thanks to the malfunctioning tax machinery, which observers claim is plagued by rampant corruption and infighting.
Collections in May totalled about Rs8 billion less than receipts in the same month of the previous year, according to Federal Board of Revenue (FBR) officials. This was despite the fact that the FBR withheld billions of rupees worth of tax refunds to artificially enlarge the collection figure.
Income tax collection dropped over 18% in the month of May to total only Rs59 billion, while collections on account of customs and federal excise duties remained stagnant. Growth in sales tax collections was less than 8% and totalled Rs81 billion over the month.
Analysts term the shortfall in collection an alarming development: they argue that the fall in collection suggests that the machinery has become dysfunctional to the extent that it cannot even sustain a growth rate equal to prevailing inflation rates, which requires no extra effort.
Cumulative tax collection for the first eleven months of the current fiscal year (July 2012-May 2013) clocked in at Rs1.682 trillion. “The results indicate that we may not be able to even cross the psychological barrier of Rs2 trillion by June 30,” an FBR official admitted.
The previous parliament had initially set the tax collection target at Rs2.381 trillion for the current fiscal year. It was later revised to Rs2.193 trillion, then cut further to slightly over Rs2 trillion. These revisions were, however, informal – officially, the FBR is still supposed to collect at least Rs2.381 trillion.
To achieve the official target, the FBR now needs to collect Rs700 billion in one month. For perspective, consider that the FBR collected only Rs275 billion in the same month last year, according to data available with the State Bank of Pakistan. If the FBR manages to match the collections figure for June last year (chances for which are very slim), the FBR will close this year at Rs1.957 trillion. That is the best case scenario.
Meanwhile, the shortfall in collection will widen the already out-of-control budget deficit by another 1.8% of Gross Domestic Product. The shortfall is simultaneously widening due to another factor: extensive government borrowing from commercial banks.
The shortfall in collection has affected both federal and provincial fiscal operations. The provinces’ shares in federal taxes were determined on the basis of the Rs2.381 trillion target set out for the FBR. The shortfall will cause a massive shortfall in their share of funds, as all provinces except Balochistan receive revenues on the basis of actual collections.
Insiders say that within the FBR, top officials are divided in the Inland Revenue (IR) and Customs groups; with the IR group sidelining customs officials, courtesy FBR Chairman Ansar Javed, who is from IR. More worryingly, sources said that transfers and postings in the FBR over the last couple of years were auctioned in return for commissions.
Published in The Express Tribune, June 2nd, 2013.
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Pakistan government introduced Remittance Card incentives some time back to encourage expatriates to send money through banking or formal channel. Remittance card holder are eligible to avail custom duty credits consistent with the limit of respective category of remittance card. These custom duty credits can be used to bring fixed duty items also and FBR has issued SRO. At Islamabad airport, custom duty officials normall stand by a podium with a years old register and when ever remittance card holders claim the custom duty incentive, custom officials flatly denied the existance of such duty credits. In 2013, Pakistan Custom rely on a register at Major capital city airport to determine the custom duty. I think, there is total mess in various government departments in Pakistan, my personal experience is that politicians are much better than government officials/officers. Why Pakistan Custom can not provide a computor to airport staff to appraise the custom duty, they do not do it because they are sitting just to bargain and they encourage people not to pay custom duty instead pay fee to them. I request new finance minister to take notice of mismanagement and corruption of custom officials at Islamabad airport and direct them to facilitate Remitance Card holder and provide them custom duty credits as per notifications of Federal Government of Pakistan.
There Must Be Built In Return For Individual Tax Return Filers. After Reaching Retirement Age Like Pakistan Bureaucracy, Pakistan Military And Public Employee, The Citizen Of Pakistan Must Also Recieve A Return For Those Filing Income Tax Return. When Each Individual Getting A " Return In Old Age," Every Eligible Will File A Tax Return, Just Why Not. It Is Simple " Common Sense, " That In Order To Broden Tax Net Give A " Direct Retirement Benefit," For Those Individuals Filing Annual Income Tax Returns. Give A Monetary Return Back To Each Citizen In Old Age Even Agriculturist At Some Point Will File Annual Tax Return. Please Make Individual Profile Of Each Annual Tax Return Filers ToGet Benefit. I Have Filed 45 Years Of AnnualTax Return, No Benefit In Old Age Yet I Must File Annual Tax Return Benefitting Welfare Of Pakistan Government Employee. The Tax System Must Benefit Also Citizen of Pakistan, The Final Beneficary.
Change Member (IR) and some in=efficient field staff. FBR is in a very big mess