The FBR’s original target was Rs2.810 trillion, which was subsequently revised to Rs2.605 trillion. STOCK IMAGE
ISLAMABAD: The Federal Board of Revenue (FBR) has apparently overstated collection figures for the recently-concluded fiscal year by Rs7 billion besides blocking billions of rupees in refunds as it desperately seeks to come close to the three-time downward revised target. The development puts a question mark over the Rs2.588-trillion collection claim.
As against the FBR’s claim that it collected Rs2.588 trillion during fiscal year 2014-15 that ended on June 30, the State Bank of Pakistan has confirmed Rs2.581 trillion as the revenue to the federal government, said a senior official. This has created a hole of Rs7 billion.
The FBR’s original target was Rs2.810 trillion, which was subsequently revised to Rs2.605 trillion. This goalpost was also missed despite levying Rs360 billion in additional taxes.
An official of the FBR insisted that the difference was on account of book adjustments, as the central bank has not taken into account the revenues under this head.
The Ministry of Finance has booked Rs25 billion shortfall in revenues against the revised target of Rs2.605 trillion, said an official of the ministry. Against the original target of Rs2.810 trillion, the shortfall amounted to Rs229 billion.
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This will push the budget deficit - gap between national income and expenditures - beyond 4.9% of Gross Domestic Product, which will result into a breach of the limit imposed by the International Monetary Fund (IMF). The government may eventually have to seek a waiver to qualify for the next loan tranche under the $6.6-billion bailout programme.
FBR and its tax collection woes
This is not for the first time that the FBR has claimed higher than the actual collection, as during fiscal year 2013-14 the taxmen had also exaggerated the collection by Rs9 billion.
It is also not the only case where the FBR has misrepresented the facts. Earlier, the FBR had reported two sets of figures for the cost of tax exemptions. In the budget documents, the cost had been stated at Rs665 billion, which was subsequently lowered to Rs412 billion through a supplementary publication. When the IMF asked the FBR about the actual cost of tax exemptions, the FBR claimed that it was a “clerical mistake”.
Plot thickens
Even the Rs2.581 trillion tax collections appears unrealistic as the events of June 30 suggest that FBR took billions of rupees in advances besides blocking refunds. By June 29, the FBR had collected Rs2.481 trillion in taxes. However, within the next 24 hours, another Rs107 billion was added to the pool. Ironically, a single day’s collection has never amounted to Rs107 billion in the country’s history.
By 3pm of June 30, the FBR’s system was showing Rs2.515 trillion collection. The figure improved to Rs2.541 trillion by 9 pm. By the morning of July 1, the FBR’s PRAL system was showing Rs2.555 trillion collection, according to officials handling the PRAL network.
However, at 11.30 pm the FBR had claimed that it collected Rs2.580 trillion in taxes.
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One genuine reason for a gap might be that the PRAL’s system was not taking into account book adjustments. These book adjustments usually remain in the range of Rs5 billion to Rs15 billion and the rest of the difference is suspected to be filled by taking advances, the sources said.
One such indication is that during first twelve days of the current month, the FBR has given Rs12 billion refunds - a figure that was only Rs7 billion for the full month last year. Roughly, Rs5 billion refunds were issued last Wednesday.
Contrary to this trend, in June, the FBR gave just Rs501 million in refunds while the total gross collection was Rs380 billion. This single figure shows that the FBR reached its Rs2.581 trillion target by blocking taxpayers’ refunds.
Published in The Express Tribune, July 15th, 2015.
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