What appears to be an attempt to hide worsening performance, the Federal Board of Revenue has apparently manipulated tax collection figures aimed at showing higher than actual growth in revenue collection in the current fiscal year.
The tax authorities have apparently lowered the actual tax collection of November last year by roughly Rs20 billion to Rs151.7 billion aimed at inflating the growth in the current month by at least 13%, showed the collection figures reported by FBR and State Bank of Pakistan.
The FBR’s provisional results showed that it collected Rs175 billion in taxes in November this year, attaining a growth rate of 15.3% over November last year.
Had the FBR taken the actual revenue collection of Rs171.2 billion as reported by the SBP for November last year, the growth in this November would have been just 2.4%, which is even worse than the performance of the PPP government.
It is not for the first time the government has toyed with previous year’s statistics to claim good performance.
It was also accused of lowering the growth rate of PPP government’s last two years to claim higher economic growth rate in 2013-14. Yet, it could not achieve the revised GDP growth rate of 4.1%. The government has withheld the release of final figures, as the growth fell in the range of 3.3% to 3.5% for last fiscal year.
Due to apparent manipulation, the growth in revenue collection during the first five months (July-November) of the current fiscal year was also inflated by about 2%. The FBR’s provisional results showed that it collected Rs900 billion in taxes from July through November, achieving 14% growth over Rs789 billion collected in the comparative period.
However, the FBR had reported Rs806 billion revenue collection for July-November 2013 while the SBP reported Rs800 billion. On the basis of the FBR’s actual numbers of the previous fiscal year, the growth in revenue collection comes to just 11.7%, which is less than half of the pace required to hit current year’s revenue collection target of Rs2.810 trillion.
The FBR version
The Rs175 billion in tax collection was till November 28 and was compared to the same day in 2013, which was Rs151.7 billion, said FBR chairman Tariq Bajwa. The November 28 was the last working day of the current month, which was also a half day. He said the reported figures were provisional and the FBR would use the actual revenue collection figure of November last year once the final figures of the current month are available.
Interestingly, the November 2013 was closed on 29th day, as there was holiday the next day. Which suggests that the FBR didn’t collect Rs20 billion in a single day.
Impact on annual target
The current pace of growth suggests that the FBR would miss this year’s target by at least Rs200 billion. Sources said the FBR has conveyed the same to the International Monetary Fund. The FBR is now eyeing Rs2.610 trillion –a likely shortfall of Rs200 billion, which would widen the budget deficit by additional 0.7% of gross domestic product (GDP).
The FBR chairman did not comment on the status of the annual target but said that over 25% reduction in oil prices would significantly hurt sales tax collection. In November, the sales tax collection turned negative and FBR collected Rs84 billion in sales tax, which was less than collection of November last year.
The FBR’s sales tax collection will drop at least Rs60 billion in the current fiscal due to dip in oil and commodities prices, according to Dr Hafiz Pasha, former finance minister.
The FBR is supposed to collect Rs1.246 trillion in July-December period. With Rs900 billion in hand, the FBR needs to generate Rs346 billion in December, which will require 66% growth rate as against the current pace of less than 12%. In December last year, the FBR had collected Rs208 billion.
The chances of a downward revision in collection or cut on development spending have further heightened after the close of the fifth month of the fiscal.
Pakistan has given a commitment to the IMF that in order to achieve the overarching goal of reducing budget deficit to 4.9% of GDP it was ready to take contingency measures.
Published in The Express Tribune, November 30th, 2014.
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Everyone please stop 'Derailing the Democracy'.
Very well researched article
FBR Year Book which is available on FBR website shows Net Tax Collection for November 2013 as Rs 171.194 Billion and Gross collection for November 2013 as Rs.181.845 Billion. FBR workforce is only has self interest and are doing hardly anything to increase the tax base. The e-tax filing system IRIS has been a disaster and that is the reason less than 5,25,000 taxpayers filed their tax return as compared to 12,00,000 that FBR was expecting. There is lot of hope of nation in Tax Reform Commission that has recently been formed.
This is the reason that PMLN is even worse that PPP. PPP is corrupt but PMLN is cunning. The later have institutionalized corruption, fraud and cheating. That is why PPP gets caught very easily but it takes some effort to expose PMLN's misdeeds.
Laikin Imran Khan ny KPK mein kya karlia - Typical patwari response
FBR has become dysfunctional. There are lot of hopes in the Tax Reform Commission to recommend turnaround of FBR so that due proper taxes are collected by FBR. This year, the main reason for reduced tax collection for month of November was the e-return filing platform IRIS that was introduced by PRAL a unit of FBR.IRIS was a disaster; it kept on undergoing changes and taxpayers could not file their tax returns. IRIS has been a disaster and a blight on FBR and Finance Minister/FBR should undertake serious action against PRAL for causing loss to the nation in terms of tax collection.
The numbers aren't fudged as you suggested. The FBR says Rs. 816 billion was collected for the 4 months last year but gave a tax rebate of Rs. 27 billion so the collection was at Rs. 789 billion last year. This year Rs. 934 billion was collected and a Rs. 34 billion tax rebate was given so Rs. 900 billion has been collected. The numbers have not been "toyed" with.
If you want a gross increase of collection it's at 12.7%.
Also at the current collection rate we'll get 2.7 trillion and the last quarter adds significantly more in tax revenue. Our target csn still be met. Why the pessimistic outlook?
Speciality of pmln. Lying lying and lying.