See-sawing: Govt pacifies business community

Dar says decision to increase tax rate would be taken next year.

ISLAMABAD:

Amid growing concerns of mini-budget due to a massive shortfall in tax revenues, the federal government moved to pacify the unnerving business community.  The government also said that any decision on increasing tax rates will be taken in the new budget.

The assurance given by Finance Minister Ishaq Dar came on the day the National Assembly’s Opposition Leader Syed Khursheed Shah condemned any government move for raising tax rates during the course of the fiscal year. Shah said that the government should be focusing on increasing the tax base instead of burdening existing taxpayers.

Dar chose the platform of the Chief Commissioners’ conference, held in the Federal Board of Revenue’s (FBR) headquarters, to clarify his earlier statement on increasing the tax rate.

“The government has not taken any decision on increasing tax rates and any such decision will be taken in the new budget,” said Dar.

The government is going to present the broader parameters of next year’s budget to the IMF by end of this month. The new budget for the fiscal year 2014-15 will come into force from July of this year.

Dar claimed that a lobby was working against him which picks any of his statements and twists it with mala fide intentions.

Dar has earlier been reported as saying that his government wanted to increase the tax rates. “Instead, I had said that the government would increase the tax net and the media flashed headlines by replacing the net with rate”, he claimed. Dar added that the twist was intended to create panic in the business community.

The government has been facing serious challenges in achieving even the downward revised tax target of Rs2.345 trillion. The Parliament’s approved target is Rs2.475 trillion. The massive shortfall in revenues is fueling apprehensions that the government will increase the tax rates or levy new taxes aimed at meeting a major condition of the IMF on restricting the budget deficit target.

During the first nine months of the fiscal year, the FBR has collected Rs1.565 trillion and needs to raise Rs910 billion to meet the original target, and Rs780 billion to achieve the revised target in the remaining three months of the fiscal year.

On an average, the FBR needs to collect Rs260 billion per month to get the reduced target, which, according to tax experts, appears to be highly impossible.

“The Rs2.345 trillion is a difficult target but it is worth trying,” said FBR Member Inland Revenue Policy Shahid Hussain Asad.

Dar admitted that the revised target of Rs2.345 trillion was a big challenge and urged the FBR to improve its strategy. He said the FBR has shown good results but the outcomes were still far below the capacity of the tax machinery.

While addressing the chief commissioners, Dar appeared to, simultaneously, be complimenting and warning tax officials. He warned the FBR officials that if they failed to achieve April’s tax target, he will make the FBR headquarter his base camp to personally monitor their performance.

The downward revised tax target for the month of April is Rs196.3 billion.

Dar also appealed to taxpayers to discharge their national duty by paying due taxes and assured them that their monies would not be misused.

After seeing massive shortfall in revenues, the FBR has already resorted to coercive and arm-twisting measures. According to sources, FBR Member Inland Revenue Service Operations Ashraf Khan has verbally directed his field formations to block all types of tax adjustment against refunds. He has also asked the Commissioners of Appeals to not give any stay orders.

Published in The Express Tribune, April 16^th, 2014.

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