FBR fails to achieve April’s target, lets down Dar again

Published: May 1, 2014
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April’s collection was just Rs10 billion, 6.5% higher than the collection made in the same month of the previous year ILLUSTRATION: JAMAL KHURSHID

April’s collection was just Rs10 billion, 6.5% higher than the collection made in the same month of the previous year ILLUSTRATION: JAMAL KHURSHID

ISLAMABAD: 

In order to honour his pledge, Finance Minister Ishaq Dar may have to shift his office from the Q-Block to the Federal Board of Revenue headquarter, as the tax authorities have let him down as they failed to achieve April’s tax target.

Against even the downward revised target of Rs196.3 billion, the FBR pooled Rs163 billion – falling short of the monthly goalpost by Rs33 billion, according to provisional results compiled by the authorities. On the parameters set by the Ministry of Finance, the FBR fell short by a whopping Rs74 billion in a single month, as the ministry has added Rs237 billion FBR revenues in its monthly fiscal framework.

April’s collection was just Rs10 billion, 6.5% higher than the collection made in the same month of the previous year – a dismal figure that speaks volumes about the prevailing corruption and height of inefficiency. The growth in revenues is even lower than the inflation rate in the country.

The strengthening rupee and slowdown in imports have adversely affected collection, said Shahid Hussain Asad, FBR spokesman.

While addressing the Chief Commissioners’ Conference at the FBR headquarter on April 15, Dar announced that either the FBR has to achieve April’s collection or else he will have no choice but to shift his office to the FBR building. Currently, Dar sits in Q Block – the office for the Ministry of Finance.

The responsibility of meeting the revenue target falls on the shoulders of FBR Chairman Tariq Bajwa and Member Operations Mohammad Ahsraf Khan.

So far, Dar has developed a reputation of delivering on what he promises. He has delivered on the promise of building gross official reserves to $10 billion and bringing down rupee-dollar parity to Rs98 a dollar. The finance minister also delivered on his promise of floating Euro bond and completing auction of next generation spectrum licences in a transparent manner.

But this time, while throwing a challenge, he relied on a workforce that is touching its lowest ebbs and is considered the most inefficient one.

The cumulative collection in the first 10 months of the fiscal year (July-April) reached Rs1.738 trillion, which is just 70% of the original target and 74% of the downward revised target. The FBR’s original annual collection target, approved by the parliament, is Rs2.475 trillion, which has now been downward revised to Rs2.345 trillion.

The April’s revenue collection also suggests that the FBR may not be able to even achieve a downward revised target. To achieve this target, FBR needs to collect Rs607 billion in the remaining two months of the fiscal year.

During the May-June period of 2013, the FBR pooled in Rs440 billion. In order to hit the Rs2.345 trillion target, the FBR requires a growth rate of 38%, which is next to impossible.

However, sources in the FBR revealed that the authorities were planning to get advances from the banks and public sector enterprises to minimise the shortfall.

Surrendering to influential lobbies after the announcement of the budget is one of the reasons behind the shortfall in revenues, according to FBR officials. Since assuming power in June last year, the federal government has accepted 26 demands of the business community, as admitted by Dar, in presence of Prime Minister Nawaz Sharif. These concessions, mainly relaxing documentation clauses, have worked against the principles of taxation, according to the sources.

The inefficiency and rampant corruption in the FBR were the other main reasons for the massive shortfall in tax targets. Due to less than the targeted collection, the federal government has already cut the development budget by Rs115 billion.

Published in The Express Tribune, May 1st, 2014.

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Reader Comments (4)

  • av
    May 1, 2014 - 6:21AM

    “the federal government has already cut the development budget by Rs115 billion.”

    They should eliminate the development budget entirely and only spend on current expenses. Development funds are invariably used to expand the size of the government and we can’t afford a larger govt.

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  • Ajab Khan Baloch
    May 1, 2014 - 10:14AM

    This was expected. Of the 26 Revenue enhancement measures in announced in Budget 2013-14, 25 of them were withdrawn due to political pressure in November/December 2013.
    In addition, if the detail analysis is done, the massive leakages at Custom stage have lead to low tax collection (Sales Tax,Income Tax at Import stage). FBR needs to be massively reformed.The culture at FBR has to change.
    The good thing FBR has done, is the top team consist of Officers of good reputation and integrity.
    Member Operation as rightly pointed out in article should stand up and take responsibility of the budget failure.

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  • AM
    May 1, 2014 - 1:04PM

    restructuring reforms are necessary in customs as well…..
    the party going on down there is “deplorable”

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  • Pashtun
    May 1, 2014 - 8:22PM

    @av:
    why not try to reduce the size of government by cutting the current expense and laying off inefficient workers from the fed gov

    Recommend

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