Rs40 bn demands to be generated through 75,800 tax cases, IMF told

ISLAMABAD: The Federal Board of Revenue (FBR) has informed the International Monetary Fund (IMF) that they have projected to generate around Rs40 billion demands through 75,800 cases selected through computerised random balloting related to Income Tax, Sales Tax and Federal Excise Duty during the current fiscal year.
This projection was shared with the IMF for completion of ninth review as the Fund’s executive board is expected to consider approval of next tranche worth $505 million for Pakistan by mid December 2015.
But this whole plan may be going down into drain as some sectors have approached the Lahore High Court (LHC) for obtaining stay order to stop audit exercise because of selection of many cases belonging to only few major sectors.
So they raised questions on random computer balloting on which the Court ordered both sides to sit down and resolve this issue amicably.
“Now the FBR is facing a difficult situation as the Board cannot withdraw cases selected for audit even if its high-ups desire so with serious intentions,” official sources pointed out and added that the random balloting of audit had even selected 44 politicians including Chief Minister Punjab Mian Shahbaz Sharif but no power lied with tax managers to delete any name from the audit list.
Others who were selected for audit by the FBR included Punjab Law Minister Rana Sanaullah, Sindh Finance Minister Murad Ali Shah, Pakistan Peoples’ Party Senator Babar Awan, Muttahida Qaumi Movement leaders Dr Farooq Sattar and Khawaja Izharul Haq, Balochistan National Party chief Sardar Akhtar Mengal and Ports and Shipping Minister Kamran Michael and PPP MNA Mir Munawar Ali Talpur.
When Finance Minister Ishaq Dar pushed the button for selection of audit through computerised balloting, he had selected 21 parliamentarians from his own party (PML-N) out of total 75,871 individuals selected for the audit.
Of the 44 parliamentarians, 21 belong to PML-N, 10 to PPP, six to Pakistan Tehreek-e-Insaf, five to MQM and one each to Jamaat-e-Islami and BNP. These include seven senators, 10 members of the National Assembly, eight members of the Sindh Assembly, three members of the Khyber Pakhtunkhwa Assembly and one member of the Balochistan Assembly.
The sources said that the cases were selected without political or any other consideration so complaints of certain sectors were uncalled for and the FBR was trying its level best to convince them about fair play in selection process.
Against generated high demands through audit, the FBR had collected over Rs8.5 billion during the current fiscal year so expecting generating demands of Rs40 billion and its materialising will pose big risk for tax machinery.
The FBR is struggling to achieve highly ambitious tax collection target of Rs3,104 billion for the current fiscal year. As the practice of decade of 90s is around the corner so the IMF has asked the government to take additional measures in order to meet shortfall being faced in the first quarter (July-Sept) of the current fiscal year.
The Economic Coordination Committee (ECC) is scheduled to meet coming Monday under chairmanship of Finance Minister Ishaq Dar for approving taxation measures mainly in shape of raising Regulatory Duty on over 300 imported luxury items for generating revenue of Rs40 billion in remaining seven months (Dec-June) of 2015-16.
So what will happen if the projections shared on account of audit exercise do not materialise till end June 2016? When contacted, FBR’s spokesman Dr Iqbal said that it was pending before the court but the Board would make efforts to convince the court of law for getting permission to go ahead with audit exercise.