Repeated concessions to businessmen nibble at tax collection drive. ILLUSTRATION: JAMAL KHURSHID
The PML-N government’s consistent policy of giving in to demands from the business community has dented the state’s revenues, as the national tax collection agency significantly fell short of its first five months’ target, collecting only Rs806 billion despite blocking refunds of taxpayers.
The Federal Board of Revenue (FBR) missed its collection target of Rs840 billion for the July-November period of fiscal year 2013-14, and chances of covering the shortfall in the coming months diminished due to over two dozen tax concessions given to the business community in just five months.
According to provisional figures for the July-November period, the tax collecting agency collected Rs806 billion, showing an increase of Rs120 billion or 17.5% over the comparative period of the previous year.
The growth in collection remained encouraging but was not sufficient to hit the benchmark of Rs840 billion. The FBR’s annual target for the current fiscal year is Rs2.475 trillion, which requires a growth in tax collection of about 28% over the previous year.
The FBR has already stated that due to these concessions, the budget has become irrelevant.
The International Monetary Fund (IMF) has already lowered its projection and included Rs2.345 trillion in its fiscal framework, which is Rs130 billion less than the official target.
In the month of November, the FBR’s performance was comparatively better than the previous four months.
The FBR surpassed the monthly target of Rs167 billion and bagged Rs169.4 billion, claimed Shahid Hussain Asad, the spokesman for the FBR, who is also member Inland Revenue Policy. He said the collection has started picking up and the FBR recorded a 21% growth over last November’s collection of Rs140 billion.
The figures that the FBR reports on the last day of each month always prove to be on the higher side when reconciled with the figures of the State Bank of Pakistan and Accountant General of Pakistan Revenue.
The FBR blocked the refunds to achieve its monthly target. In November, it paid just Rs5 billion in refunds. Overall, in five months, the FBR paid about 40% fewer refunds than the previous year.
One of the evidences of blocking the refunds is the 33% growth in sales tax collection in November. Last month, the FBR collected Rs85 billion in sales tax, which was Rs21 billion more than the collection made last November.
In November, the income tax collection stood at Rs57 billion, registering a 19% growth, while federal excise duty collection was Rs13 billion with 44% growth. Customs duties again remained a problematic area with only 6% growth as collection stood at just Rs19 billion.
The PML-N government has so far granted 26 big concessions to the industrialists and traders that have dented the FBR’s revenue collection. On top of these concessions, the prime minister has announced a blanket amnesty programme for industrialists, giving them a chance to launder money. All this will hurt revenue collection.
Published in The Express Tribune, December 1st, 2013.
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This government is failing under every point of view. Thank you PML-N voters. Sher aya sher.
According to one estimate,the blocked refunds only in lTU,Karachi exceed Rs 60 Billion, overall in Pakistan the blocked refunds now exceed Rs 90 Billion Does FBR realise that due to these blocked refunds the economy is slowing down and the businessmen have to pay interest. The problem is FBR has failed to broaden the tax base. What happened to the much taked about 300,000 notices to potential tax payers that FBR was to issue.?
Leadership od Pmln itself doesn't pay any taxes. How can they ask others to pay any?
@The Failed Rebel: Any evidence that Pakistani minds are the best I.e. better than all your neighbors? Please provide reference.
Is this the dawn or dusk of Pakistan? At what point does the common man say "enough is enough"?? When elections are stolen, tax laws surreptitiously ignored, favorites and their projects are given a wink, and home is in London or Jeddah, one will always find a loophole. FBR Babus will be there to help.
What happened to the best and experienced economic team pmln were going on about before the elections?
Corrupt leaders always bring corrupt laws to white their black money and their cronies. No wonder FBR are short in collecting taxes and again it will be poor paying the price.
Good I hope we default on the loans and don't pay have to pay the huge interest which only results in poverty, inflation and unemployment. Sanctions will kick the spine of the elites, and encourage home-grown solutions. It would be a daring step but have faith in your Lord and your abilities my people. We are one of the best minds on the planet, just rusted due to lack of visionary leaders. Failed completely, this government. Anti-people, anti-peace, vision-less, spineless, pro-American, pro-elite puppets. (Why loans are bad? sanctions? etc. Read my blog, redundancy is useless)
So industrialists and traders who already do not pay any taxes are getting tax relief whereas subsidiaries are being waved and taxes slapped on the necessities of common man like food, electricity and petrol?!
How could the concessions only given a few days ago be hurting revenue already? Their impact is yet to be felt.