FBR fails to meet ‘thrice downward revised’ tax collection target

ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday night claimed that its collection stood at Rs2,580 billion for fiscal year 2014-15 ended on June 30, 2015 against thrice downward revised target of Rs2,605 billion.
But no top official in the FBR was ready to give official quote on this claim. This claim showed that on last day the FBR collected around Rs100 billion.
The FBR has collected Rs2580 billion during the whole financial year 2014-15 against thrice downward revised target of Rs2605 billion. With collection of Rs2580 billion, the FBR’s tax to GDP ratio stands at just over 9.4 percent of GDP for fiscal year 2014-15.
The FBR has achieved around 14 percent growth by netting Rs2580 billion compared to Rs2254 billion in the same period of the last financial year 2013-14.
The FBR has witnessed major blow in the wake of declined oil prices in international market that had negatively impacted one/third revenue spinner. The FBR’s revenue collection is highly skewed that relied upon three major spinners of collection including banking, telecom and POL products which accounts for around 70 percent collection.
Despite taking revenue measures through four to five mini budgets, the FBR could not boost its revenue collection mainly because of narrowed tax base. Now efforts are underway to make life of unregistered person and companies more expansive through raising rates of withholding taxes. But there has been growing fear that it might cause registered people to prefer to go out of tax net by paying more tax rates instead of remaining within the list of active taxpayers.
The FBR had initially envisaged its tax collection target at Rs2810 billion which was revised downward thrice to Rs2756 billion, then Rs2692 billion and finally Rs2605 billion. “This revised downward target by thrice was even missed out by the FBR with huge margin, indicating that flawed budgeting making process was underway where the FBR’s target was pitched at higher side having no relevance with ground realities on macro-economic front” said the official.
However, under the IMF, the FBR is committed to take measures for broadening of narrowed tax base and so far the Board sent out 100,000 tax notices to non-filers. The FBR claimed that few thousands reciprocated and filed their returns but its collection showed peanuts amounts recovered through these measures.
The former economic advisor and Dean NUST Business School Dr Ashfaque H Khan had predicted at time of budget 2014-15 that the FBR would not be able to achieve its target of Rs2810 billion and its collection would be standing at around Rs2550 billion on June 30, 2015. His estimation proved correct and Ministry of Finance as well as FBR’s projection failed to deliver and it had been happening for last several years unabated.
Dr Ashfaque H Khan told this scribe that even after taking additional tax measures of Rs360 billion and withholding Rs250 billion refunds, the FBR has failed to achieve even thrice downward revised tax collection target, adding that it was clear indication that the FBR as institution collapsed and no amount of reforms could work to improve its performance.