FBR concedes current tax target difficult to achieve

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The Federal Board of Revenue (FBR) finally conceded before a parliamentary panel on Thursday that achieving the current year’s revenue collection target of Rs 3.6 trillion was difficult.

Briefing the Senate Standing Committee on Finance, FBR Chairman Nisar Khan just stopped short of saying that the tax collection target set for the ongoing fiscal year was impossible, saying that it was difficult to achieve.

Khan said the unrealistic target was set by the Finance Ministry without consulting the tax authorities. He said that they gave a lot of tax incentives to the most tax compliant sectors, such as fertilizers, industries and textile, adding that the estimated growth from real estate sector did not materialise due to a slump in the market.

The Finance Ministry had reduced GST on urea from 17 per cent to 5 per cent. This major incentive was provided to revive the agriculture sector which is faced with a unique crisis of overproduction and fall in the commodity prices. Tax incentives were provided to the textile sector to enhance exports and increase job opportunities.

The tax authorities said the tax collection during the first quarter of the current fiscal year remained at around Rs 625 billion. The collection was short of Rs 50 billion as against the tax target for the first quarter. The growth in tax collection was only six per cent as against the target of 18 per cent.

Senator Mandviwala, who chaired the meeting, also conceded that the tax target was imposed on the FBR. He said the other problem was the advance tax which the FBR had already collected till December from the big corporate firms.

However, the FBR chairman claimed that the growth in tax collection was due to enforcement and not from advance taxes.

Rejecting the claim, Senator Mandviwala said there was no tax enforcement campaign in the country. He said that advance tax was like a torture to businessmen. He said the National Bank was being pressurised to pay its annual tax in one go to show an increase in tax collection.

Senator Mushahid Ullah termed the advance tax as ransom. Mandviwala said that they would curb FBR powers to get taxes in advance in the next fiscal year budget.

Indian government’s decision to ban big currency notes was also discussed in the committee meeting. Senator Usman Saifullah proposed that the government should also consider withdrawing Rs 5,000 and Rs 1,000 currency notes. The members said that these notes were used as bribery and their banning would help curb bribery.