July-Feb tax collection target missed by Rs484bn

ISLAMABAD: The Federal Board of Revenue (FBR) missed tax collection target for first eight months (July-Feb) of the current financial year by a whopping Rs484 billion.

According to provisional figures, the FBR has collected Rs2.725 trillion during this period against the target of Rs3.209tr.

The figures, however, show a growth of 16.35 per cent compared to Rs2.342tr collected during the same period of last financial year.

In February, the FBR posted a shortfall of Rs99bn by collecting Rs318bn against the target of Rs417bn for that month. The tax authority estimates it will collect another Rs1-2bn in book adjustments.

In the tax year 2019, the number of return filers reached over 2.44 million against 2.9m of the previous year.

More than double of the current growth levels would be req­uired to approach the annual target.

However, figures show a growth of over 16pc compared to Rs2.342tr collected during the same period of last financial year

FBR spokesperson confirmed to Dawn that the Feb 29 return filing date would not be extended further.

The list of new active taxpayers will be changed from tax year 2018 to 2019 which will be uploaded on FBR website after midnight.

As a result, 400,000 taxpayers did not file their returns in the tax year 2019. The spokesperson, however, said that those who did not file their return this year were nil filers last year.

FBR high-ups believe that the delay in appointment of a regular chairman and other officers at top positions in the board has caused uncertainty within the tax department leading to revenue bleeding on a daily basis.

FBR chairman Shabbar Zaidi is on indefinite leave and the government has given charge to member administration Ms Nausheen Amjad. Since January, tax issues are being handled on a day to day basis which leads to a consistent decline in revenue collection.

The government has almost finalised the appointment of Haroon Akhtar Khan as Special Assistance to the Prime Minister on Revenue. However, the delay in the notification adds to the uncertainty in field formations.

During the first eight months of the current fiscal year, the FBR paid Rs78bn refunds to taxpayers, mostly exporters.

In the last meeting, it has been conveyed to the International Monetary Fund (IMF) that the FBR will not be able to reach even close to the revised target of Rs5.270tr. “We cannot achieve this target” an official privy to meetings told Dawn.

It is estimated that revenue collection will remain around Rs4.8tr as against Rs3.85tr of last year. “This will be an increase of Rs1tr in one year,” the official said, adding that it would be the highest annual growth in revenue collection.

The IMF has already lowered the revenue collection target to Rs5.270tr from the budgetary projection of Rs5.503tr.

The customs gross collection fell short of the target by Rs130.9bn (or 23.5pc) to Rs425.2bn versus the projected Rs556.1bn. This decline was mainly attributable to falling imports, and contributed by mis-declaration, corruption and under-invoicing.

In the first sevenths of the current year, the value of imports went up by 1.14pc in rupee terms. The taxes are being collected in rupees but the decline of taxes at import stage suggests corruption within the customs department.

The government has recently transferred a few senior customs officers from Quetta and Peshawar on charges of corruption. However, the government is reluctant to take action against such officers posted at Karachi ports.

The income tax gross collection clocked in at Rs1.002tr versus a target of Rs1.137tr over the same period last year, showing a shortfall of Rs135bn or 11.87pc. This was despite the imposition of several revenue measures by in the last budget.

In the first eight months, sales tax collection on goods reached Rs1.152tr as compared to the projection of Rs1.310tr, thus missing the target by Rs158bn or 12.06pc. The general sales tax on goods has failed to hit the target despite expansion of tax on goods and double-digit inflation.

Meanwhile, the gross collection of the federal excise duty (FED) reached Rs166.8bn, against a target Rs207.4bn, showing a shortfall of Rs40.6bn or 19.57pc. The FED rates were also revised upward on cigarettes and other products in the last budget.

Published in Dawn, March 1st, 2020

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