The FBR Ponzi scheme

Published: February 20, 2015
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The FBR not only lost taxpayers’ money, but also never actually achieved its downward revised revenue collection targets. CREATIVE COMMONS

The FBR not only lost taxpayers’ money, but also never actually achieved its downward revised revenue collection targets. CREATIVE COMMONS

Is the Federal Board of Revenue (FBR) the most cynical department of the government or just the most dangerously naive one? The shenanigans involving advance income taxes from the country’s largest banks appear to have reached a juncture where, far from being a simple accounting sleight of hand, they have actually started costing the taxpayer money. It was enough when the FBR tried to hoodwink parliament by declaring that it had achieved greater revenue collection than it really had. That it did so while having to pay an interest penalty for deliberately delayed refunds is simply unacceptable.

The FBR has a habit of not being able to make its collection numbers every year and has been turning to large taxpayers, mostly commercial banks, to pay advances on their taxes for the next fiscal year on the promise that the advances would be returned to them in the next fiscal year. In effect, this makes the collection of income taxes into something akin to a Ponzi scheme, where every year the government has to collect more advance tax at the end of the year to make up for the refunds given back to the banks at the beginning of the fiscal year. That such an exercise is ludicrous would make sense to anyone with only the most rudimentary understanding of arithmetic. But apparently, that is too much to ask of the FBR’s senior staff. We understand that the FBR’s job is not easy, especially in the absence of the political will to engage in a meaningful crackdown on tax evasion. But the least that the civil servants could do is not actively make the problem worse.

This little scheme of the FBR has managed to cost the taxpayers Rs12 billion in payments of interest to the four largest banks in the country. The FBR not only lost taxpayers’ money, but also never actually achieved its downward revised revenue collection targets. So why did it matter so much to it to engage in this scheme? It is an expensive error that has left the taxpayers with a large bill and no meaningful benefit. Heads should roll in Islamabad for this incompetence.

Published in The Express Tribune, February 20th,  2015.

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Reader Comments (3)

  • Tousif Latif
    Feb 20, 2015 - 7:29AM

    In a country where economy and economics is reduced to twisting and turning of figures.Governments have no long term planning and just interested in completing their terms such nonsence and incompetence on the part of a state organ is not the last story of its kind.In organisations like FBR professionals from taxation and accounts should be hired .Appointing those who just crammed history or social sciences and vomitted that out accurately at a given time and have no proir knowlege of taxation cannot deliver.It is a sad fact that this nation is being fleeced and some cheaters are enjoying a princely status and are lavishly rewarded for their ill devised plansRecommend

  • Malik Tariq
    Feb 20, 2015 - 10:45PM

    When govt chooses to appoint the most corrupt bureaucrats like Salman Siddique as Chairman FBR and others like him, what else can you expectRecommend

  • Johnson G
    Feb 25, 2015 - 7:32AM

    FBR has become dysfunctional,in-effective and inefficient
    FBR should be completely re-organised with an independent Board which should consist of persons of high competence and integrity from private sector. In-competent staff should be laid off. Very strict action should be taken against corruption. I have very high hopes of the Tax Reform Commission and I hope they recommend massive weeding off of the dead woods in FBR and staff reduction and an independent Board to run FBR. FBR has totally failedRecommend

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