FBR claims to have met tax revenue target

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FBR was unable to achieve tax revenue target for 2010-11 as it fell short by Rs40 billion. However, FBR claims to have achieved the target to secure the next installment of IMF loan, sources told Pakistan Today on Wednesday.
They said that Federal Board of Revenue (FBR) has played a technical game of showing a surplus target, by adding up July 2011 payments in June 2011.
Data Processing Collection (DPC) is also displaying a shortfall of Rs40 billion in the system, an official said. He further added that in order to avoid any further shortfall, the board has stopped payments of tax refunds and sales tax to customers. He said tax offices were instructed to entertain clients after a period of one month. “We are not entertaining any refunds, only to maintain maximum tax collection,” he said.
The government had to revise its tax revenue target thrice in 2010-11. Initially, the government set revenue collection target at Rs1,667 billion in the annual budget 2010-11, but it was revised due to the destructive floods in the country in August 2010 and was fixed at Rs1,604 billion. However, it was revised once again and new target was set Rs1,588 billion.
Government in March 2011, through Presidential Ordinance took a few tax measures in order to collect Rs53 billion.
It resulted in imposition of a 15 per cent flood surcharge on every income taxpayer, increase in Special Excise Duty from one to 2.5 per cent and eliminated tax exemptions on agricultural inputs including fertilisers, pesticides and tractors.
In press conference on June 30, FBR Chairman claimed that tax revenue target was not only achieved but there was a surplus of Rs2.462 billion.
FBR has shown the payments of July 2011 (next fiscal year) as payments of June 2011 (previous fiscal year). “The board played a technical game of showing payments of July in the month of June,” said a senior income tax lawyer while seeking anonymity. He also confirmed that no payments and tax refunds are being made to his clients by the tax office. “We have been asked to contact in the next month and we are informed that our payments would be made in August,” he added.
Sources said that the government has tried to please International Monetary Fund (IMF) by claiming to have achieved a target that secures the next installment of the loan, which was suspended when tax revenue targets were not achieved. “IMF could have rejected the loan installment if tax revenue target was not achieved therefore the financial managers claimed to have surpassed the target,” said sources adding that it also helped the government to show a lower fiscal deficit and seek the next loan installment from IMF.
They said Data Processing Collection (DPC) of FBR is clearly showing shortfall of Rs40 billion and an independent audit or checking could expose the government’s claims.
FBR Chairman Salman Siddique while talking to Pakistan Today ruled out any shortfall in tax revenue targets saying, “we have been falsely accused of providing wrong figures.” He said neither advanced tax payments nor tax refunds have stopped. “The refund system is centralised and it cannot be stopped,” the chairman claimed.

1 COMMENT

  1. The claims of FBR are not substantiated with proof. The FBR officials admited manipulations. The Director Research & Statistics might have provided the fake figures to innocent Chairman. Let Auditor General of Pakistan certify the figures but he has limited/restricted access to FBR information!

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