Defeating the purpose: FBR misses tax target for 2013-14

The Board will pool Rs10b more before final results.

Shahbaz Rana July 01, 2014


The Federal Board of Revenue (FBR) missed the outgoing fiscal year’s tax collection target as politically motivated tax concessions granted by the government and the inefficiency of machinery diluted the impacts of tax measures.

According to provisional results compiled until Monday night, the national tax collection agency could collect Rs2.258 trillion in taxes, falling short of the original collection target by Rs217 billion and the revised target by Rs17 billion.

Parliament had initially approved an annual revenue target of Rs2.475 trillion for 2013-14. However, the figure was initially revised by the government to Rs2.345 trillion and now stands at Rs2.275 trillion.

The last revision came a few weeks back. However, the government could not predict the revenue collection and missed the target by Rs17 billion. The Rs2.258 trillion collection was Rs312 billion or 16% higher than the collection made in the previous fiscal year.

FBR Chairman Tariq Bajwa said that the Board will pool about Rs10 billion more before the final results will be released next week.

According to tax experts, the government was equally responsible for missing the original tax target of Rs2.475 trillion because concessions given to influential industries.The PML-N government had introduced Rs206 billion tax measures for the fiscal year 2013-14.

From July 2013 until November 2013, the government had agreed to more than two-dozen demands made by the business community. Finance Minister Ishaq Dar admitted to this in the presence of PM Nawaz Sharif at the launch of an amnesty scheme at the PM’s Office.

According to an IMF press release, fiscal consolidation is on track but efforts to broaden the tax base and increase tax-to-GDP ratio must be accelerated.

Eliminating tax concessions and exemptions will not only improve tax collections, but will also produce a fairer and simpler tax system and will improve the investment climate, the press release added.

Meanwhile, speculations that the Rs2.258 trillion collection was gained through advances obtained from commercial banks have been denied by the spokesman of the FBR Shahid Hussain Asad.

The IMF has already allowed modification in end-June budget deficit target of 5.8% but the nature of the waiver was not known yet as the Ministry of Finance insists that the deficit target remains sacrosanct at 5.8% of Gross Domestic Product.

The missing of the revenue collection target will have direct bearing on new fiscal year’s Rs2.810 trillion target as it will erode the base by the same amount.

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


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