‘Revenue collection shortfall’


-File Photo

The performance of Federal Board of Revenue, during the first quarter of the current Fiscal Year has been positive and satisfactory, as opposed to the impression conveyed through the an editorial carried by Business Recorder on 4th October 4, 2017. The insinuation that FBR has missed its budgetary target for the first quarter by Rs 29 billion is wrong and misconceived. It is pertinent to mention that no quarterly or half-yearly budgetary target have been assigned to FBR. The target assigned to the FBR is to collect Rs 4013 billion in the current fiscal year through generating revenue growth of 19.4% over the revenue collection for the last fiscal Year. FBR has clocked provisional collection of Rs 765 billion for the first quarter, recording revenue growth of 20%. In the month of September 2017 alone the Board as per the provisional figures has collected Rs 315 billion as against Rs 263 Billion in September 2016, showing growth of 20% over the collection of September 2016. It may be kept in mind that the collection to be received through book adjustment entries is not included in the provisional figures. This is a huge improvement on the growth of 0.8 % registered in the monthly collection last year. To put things in perspective it may be noted that the growth of over 20% during July-September 2017 has been recorded against around 7% growth achieved during corresponding period of July -September 2016.

The allegation that FBR strives to achieve its target by holding off due refunds of taxpayers to manipulate its figures is also wrong. The growth of 20 % in the July-September quarter in this fiscal year has been recorded despite increase of 110% in the amount of refunds issued during the first quarter in this fiscal Year as compared to the corresponding period last year.

In addition to these facts the FBR is also in the middle of reform process of the taxation system. Over the years FBR has taken steps to generate Broadening of tax base. These steps have ranged from policy initiatives such as legislation increasing the cost of business for non-filers, to operational actions such as establishing of BTB zones in its field formations. The bifurcation between filers and non-filers has been created to induce the non filers to file their returns in order to avoid higher tax rates on transactions such as cash withdrawal, motor vehicle registration, dividend etc as compared to the rates applicable on filers. Furthermore, unlike non filers, filers are also legally allowed to claim credit of adjustable withholding taxes against their tax liability for the year. So the allegation that tax policy works against the filers is totally baseless. FBR has recently created BTB Zones in its Regional Tax Offices, whose sole job is to find, mark and register potential tax payers to be brought into the tax net.

Pakistan is categorized as middle income country by International Agencies. These agencies have categorized middle income countries as economies with Direct Taxes share in tax revenue ranging from 40-45%. Pakistan’s share of Direct Taxes is also 40 % and within range of its income category. Implying that the performance of FBR is unsatisfactory is not only against facts but also unfair to the hard work put in by its officials. This is the same organization which has increased revenue collection from Rs 1946 billion in tax year 2013 to Rs 3362 Billion in tax year 2017. The finance Minister has also appreciated this and expressed his satisfaction on the provisional revenue collection figures and has expressed confidence that the same trend shall continue and the entire team of FBR would not leave any stone unturned in attaining the desired revenue growth during the current fiscal year.