ISLAMABAD: The government is encountering a substantial shortfall in revenue collection including Rs 40 billion in Karachi alone. In this regard, Federal Board of Revenue Chairman Tariq Bajwa has said that mid-year corrections are being ordered to meet the targets in the remaining five months.
Against the envisaged tax collection target of Rs 2,475 billion for the current fiscal year, FBR has so far collected Rs 1,130 billion during six months and 20 days as compared to a collection of Rs 971 billion in the corresponding period of fiscal year 2012-13.
FBR’s year on year growth in revenue collection stood at 16 per cent while it required a growth of 28 percent to achieve its desired target of Rs 2,475 billion on June 30, 2014.
To avoid the expected shortfall, FBR Chairman Tariq Bajwa has said, “We are taking stock of the whole situation and directing all field formation offices to generate demands as excuse of not receiving returns is no more acceptable. The devised strategy would be implemented in all over the country.”
He said, “It is a matter of grave concern for FBR that the dutiable imports have dwindled in a major way during the current fiscal year but we are taking mid-year correcting steps by ensuring creating of demand on received returns and holding audit of withholding taxes.”
FBR has been facing substantial revenue shortfall during the current fiscal year as in the Large Taxpayer Unit (LTU) Karachi alone, the shortfall is more than Rs 40 billion so far.
When FBR Chairman’s attention was drawn towards this massive shortfall in Karachi, he said that the Board changed chief commissioner of the LTU Karachi and recently appointed Rehmatullah Wazir on this slot.
The chief commissioner of RTO-1 Karachi was also changed and now Dr Irshad has been appointed with the task to maximise revenue collection. He said almost two-third imports were exempted from taxes on account of various SROs or different agreements while one-third imports fell into the category of dutiable items. This major revenue spinner, he said, grew by two to three per cent during the current fiscal year which is a matter of grave concern for FBR.
FBR Chairman said that the Board received returns from individuals as well as corporate sectors and now LTUs and RTOs were assigned to generate demands by evaluating their genuine income and ensure compliance.
“The effective audit of withholding tax is another priority area for the FBR which will be focused upon in weeks ahead to ensure increased revenue collection,” he added.
Although, IMF has already scaled down FBR’s target to Rs 2,345 billion for the current fiscal year but so far the Board has not yet made any effort to reduce its tax collection target at official level to the Ministry of Finance.
In the remaining five months and 10 days till June 30, 2014, FBR will have to collect Rs 1,345 billion. In case of slippages in revenue, the government’s fiscal framework will be torn apart and IMF’s programme i.e. Extended Fund Facility will enter into a danger zone.
A Finance Ministry press release quoted Tariq Bajwa as saying that FBR had collected Rs 1,031 billion till December 31, 2013. Besides, it has refunded Rs 56 billion against sales tax compared to Rs 44 billion in the corresponding period last fiscal year. He stated this in a meeting to review performance of FBR for the period July-December 2013. The meeting was chaired by Minister for Finance Senator Muhammad Ishaq Dar.
The Finance Minister also reviewed the progress made by FBR in the compilation of tax directory for parliamentarians and its publication by February 15, 2014. Dar said that though an ambitious revenue target of Rs 2,475 billion was set by the government, it is satisfying to learn that FBR has achieved a growth of 16% in its revenues.
This, he said, was made possible because of pro-business policies of the government, improved financial discipline, clearing of circular debt, leading to increased economic activity in the country.
Dar said that use of information technology for data collection is the way forward to increase revenue and widen tax base in the country. In this connection FBR officials should coordinate with organisations within the country as well as interact with HM Royal Revenue Service of United Kingdom and Revenue body of Turkey which are success stories in increasing and collection of taxes.
Dar said that while the increase in revenue collection is appreciable, FBR officials will have to redouble their efforts to meet the target as it is critical for the economy of the country.
He also chaired a high powered committee to streamline and rationalise Statutory Regulatory Orders (SROs) and directed FBR to hold its meetings more frequently so that an expeditious decision about SROs can be made at the earliest.”
