ISLAMABAD: The Federal Board of Revenue (FBR) managed to collect Rs55 billion during the last fiscal year of 2017/18 instead of Rs120 billion under a tax amnesty scheme announced last year for concealed local and foreign assets, sources said.
The sources said the revenue body actually fetched Rs35 billion in July 2018 and the fact contravened a claim of the FBR that the collection of the amount during the last fiscal year was one of the factors behind revenue shortfall of Rs233.2 billion in the July-February period. The government projected the highest ever revenue shortfall being faced by the FBR in its whole history as the growing shortfall might touch Rs485.9 billion till June-end. The annual target is Rs4.398 trillion.
“So, it is not true that the FBR did not collect any amount under the tax amnesty during the current fiscal year,” a well-placed source added.
In April last year, the government announced tax amnesty scheme to give residents one-off tax benefits for repatriating undeclared local liquid assets with a five percent penalty, undeclared foreign liquid assets with a two percent penalty (if repatriated, or a five percent penalty if remaining abroad or in foreign currencies), and undeclared fixed assets – whether held locally or abroad – with a three percent penalty. The scheme expired in July.
FBR officials, in a support to their claim, said tax collection under the amnesty was a one-time phenomenon.
The FBR released low sales tax refunds during the current fiscal year than a year ago. Sales tax refunds amounted to Rs13.869 billion in the July-February period as against Rs40.116 billion in the corresponding period a year earlier, indicating that the board gave around Rs27 billion more refunds last year.
FBR officials, in another justification to the shortfall, said tax on salary income was drastically decreased in the Finance Act 2018 and the threshold was increased to Rs1.2 million from Rs0.4 million in one go.
The amendments brought withholding tax collection by various government and private withholding agents down, causing revenue loss of Rs32.4 billion in the July-February period. Annual revenue loss would reach Rs50 billion due to the concessions.
Tax experts argued that when the FBR knew the revenue impact of such tax concessions then why it got convinced to first and second amendments in finance bill in September 2018 and February 2019.
The FBR launched campaign against high-net worth individuals with deafening voices and there was also a claim of Prime Minister Imran Khan that the tax collection would be doubled under the regime and when honest people would rule over the country.
There is a need to ascertain reasons that why the campaign against high-net worth individuals have so far failed to yield any positive results. One can ask why the improvement in administration could not translate into increased collection.
The FBR also launched survey of houses in posh areas of the federal capital, but it too lost steam.
Asked about revenue shortfall, FBR’s officials said it is quite obvious in the current fiscal year as the government prefers to fix the loopholes in the system instead of focusing only on collection.
Reduction in general sales tax on petroleum products, suspension of withholding tax on telecom, reduction in development expenditures, import compression and many other factors played role in suppressing revenue collection.