The apex tax authority likely to miss tax collection target by Rs84 billion
ISLAMABAD: Federal Minister for Finance and Revenue Dr Shamshad Akhtar has directed Federal Board of Revenue (FBR) Chairman Tariq Mehmood Pasha to make all possible efforts to achieve the revised revenue collection target of outgoing fiscal year.
The caretaker federal minister was chairing a meeting to review the performance of the FBR in the current financial year (2017-2018). The meeting was informed that FBR would have to collect mammoth Rs661 billion in the ongoing month (June) to meet the revised tax collection target of Rs3.935 trillion for current fiscal year, said sources.
The federal government had already revised the tax collection target of FBR to Rs3.935 trillion for the outgoing fiscal year from the Rs4.013 trillion. However, the FBR officials believe that they may not achieve the target, as collecting Rs661 billion in a month is a gigantic task. The FBR had collected Rs3.274 trillion during eleven months (July to May) of the ongoing fiscal year as against Rs2.854 trillion during the same period of the previous fiscal year, registering 14.4 percent growth in collection.
The expected revenue collection of Rs3.85 trillion will be Rs162 billion lower than the original target and Rs84 billion less than the revised target that the PML-N government set hardly a month ago.
The anticipated collection of Rs3.85 trillion will be higher by roughly Rs490 billion or 14.5% than the receipts of previous fiscal year.
In order to boost collection, the FBR had taken additional revenue measures of more than Rs150 billion including the imposition of regulatory duty. Secondly, the positive impact of 10% depreciation of the rupee on tax collection was a minimum Rs55 billion, according to FBR officials.
Thirdly, the nominal gross domestic product (GDP) growth of about 10% (inflation plus real GDP growth) should have yielded an additional Rs336 billion in taxes.
The combined effect of these factors should have been Rs540 billion, which suggests revenue leakages. The higher tax collection on the sale of petroleum products due to increase in their prices was in addition to the above factors.
The FBR told the finance minister that release of Rs33 billion in sales tax refund on the last day of May would hit revenue collection. However, these refunds had been blocked in the past to inflate revenues. The FBR’s internal assessment revealed that even after paying Rs33 billion in refunds, it still owes refunds of Rs300 billion. It has also taken Rs150 billion in advance income tax to meet its quarterly targets, said the officials.
During the meeting, the FBR chairman felicitated the federal minister on assuming her new responsibilities and gave a detailed presentation on the measures so far being taken by the Federal Board of Revenue to achieve the tax collection target, the major steps taken by FBR to facilitate the taxpayers and the key achievements of FBR during the last five years period.
The chairman briefed the minister that the tax to GDP ratio has increased from 8.7pc in 2012-13 to 12.4pc of GDP in 2017-18. He told the minister that the numbers of tax return filers has almost doubled to 1.4 million till 2017-18 and SROs worth Rs300 billion have been eliminated as a major reform to broaden the tax system. He stated that for the facilitation of the taxpayers their CNICs have been adopted as the National Tax Number and the number of tax slabs has been reduced to 4 from 7. He also mentioned the queue management system for the Sales Tax Refund and direct transfer of sales tax refunds into taxpayer’s accounts as major reforms to upgrade the tax system in the country.
The minister, during the meeting, discussed the overall macro-economic condition of the country and the importance of FBR as the major revenue generation source for the government’s operations. The minister stressed the need to improve tax to GDP ratio of the country to fund the development projects.
Dr Shamshad sought the feedback from the FBR chief on the impact of different amnesty schemes and tax rebates offered by the previous government on the revenue collection targets. The minister also stressed the need for the upgradation of the tax system through the use of technology.
The meeting was attended by senior officers of Ministry of Finance and Federal Board of Revenue.
