Tax collection: Reconciled figures show gap of Rs9b

Published: December 2, 2014
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The figures released by the State Bank of Pakistan (SBP) put actual collection at Rs2.257 trillion, depicting a gap of Rs9 billion. ILLUSTRATION: JAMAL KHURSHID

The figures released by the State Bank of Pakistan (SBP) put actual collection at Rs2.257 trillion, depicting a gap of Rs9 billion. ILLUSTRATION: JAMAL KHURSHID

ISLAMABAD: The authenticity of economic statistics compiled by government departments has again come into question as a gap of Rs9 billion has been detected after reconciliation of tax figures for the last fiscal year.

The Federal Board of Revenue (FBR) had reported that it collected Rs2.266 trillion in taxes in fiscal year 2013-14 that ended on June 30 this year. However, the figures released by the State Bank of Pakistan (SBP) put actual collection at Rs2.257 trillion, depicting a gap of Rs9 billion.

According to SBP officials, their figures are based on the data provided by the FBR.

In terms of its implications for the overall fiscal operations of the country, the amount is not big but it underlines the credibility risks the government is facing. The Ministry of Finance has picked Rs2.266 trillion while making an assessment of fiscal operations for the last fiscal year.

Apart from the revenues, questions are also raised about the authenticity of unemployment, inflation, poverty and economic growth numbers.

Earlier, the government had announced that it would start releasing quarterly gross domestic product (GDP) growth rates in an effort to address transparency concerns. But it backtracked after growth fell below 3.5% for 2013-14, lower than the revised projection of 4.1%.

Finance Minister Ishaq Dar has already stated that they will not release the final growth rate for 2013-14 before June next year.

The growth of close to 3.5% could be announced at the time of unveiling current year’s pace of economic expansion aimed at taking advantage of a low base, said Dr Ashfaque Hasan Khan, member of the government’s Economic Advisory Council.

The revenue gap of Rs9 billion is significant when seen in the context of the annual target of Rs2.275 trillion, which was revised downward twice, and the desperate efforts made by the FBR in June to reach the goal.

Originally, the target was Rs2.475 trillion for 2013-14, but it was revised to Rs2.345 trillion and again to Rs2.275 trillion. The last revision came just a few weeks before the close of fiscal year, but still the government could not hit the mark.

According to FBR officials, there was no deliberate attempt to overstate the tax figures as some of the entries were recorded both manually and electronically because of weakness of the bureau’s information technology wing.

They added top economic managers were aware of that, but it was not immediately clear whether the reconciled data was reported to the International Monetary Fund or not.

For the first quarter (July to September) of the current fiscal year, the FBR has also reported higher tax collection at Rs549 billion. However, the SBP and Accountant General of Pakistan Revenue put the revenues at Rs537.8 billion.

For November, the FBR claimed a growth of 15% in revenues, but final data suggested that collections stood at Rs178 billion, higher by only 4.1% over Rs171.2 billion in November last year.

Owing to the slow pace of growth in taxes, the government is expected to revise downward this year’s target of Rs2.810 trillion by Rs200 billion, say sources. However, it may not announce the revision in order to stave off criticism.

Published in The Express Tribune, December 2nd, 2014.

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Reader Comments (1)

  • Ikramul Haq
    Dec 2, 2014 - 2:25PM

    The pressure to perform becomes acute when an illegitimate political set-up seeks legitimacy by way of improved economic performance. Fudging began in late 1999 in the Federal Board of Revenue (then the Central Board of Revenue) when the IMF pointed towards discrepancies in the fiscal accounts. The coup-makers, who had just seized power, were quick to blame it on the ousted government of Nawaz Sharif, in particular its finance minister Ishaq Dar. Ironically, key finance bureaucrats before and after the discovery of fudging remained the same. The newly-imported finance minister, Shaukat Aziz, was too eager to pay the penalty to the IMF and bill himself as the country’s maiden Mr Clean. There is no evidence that Mr Dar personally supervised or ordered any creative accounting. The discrepancies were the result of bureaucratic incompetence and lack of professionalism–http://tribune.com.pk/story/219293/a-history-of-figure-fudging/

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