FBR faces tax shortfall of Rs325 bn in eight months

ISLAMABAD: Amid the government’s inability to find out someone for appointment of chairman FBR on permanent basis, the FBR faces a massive tax shortfall of Rs325 billion in the first eight months (July-Feb) period of the current fiscal year.

After getting medical leave for an indefinite period by the Chairman FBR Shabbar Zaidi, the government had given acting charge to Nausheen Javed but so far it has been unable to appoint anyone as permanent chairman FBR. There are some practical problems and the PM has not yet firmed up his mind whether he would be appointing Special Assistantto PM on Revenues Haroon Akhtar Khan on this position. However, the Adviser to PM on Finance Dr Abdul Hafeez Shaikh wants to see chairman FBR of his choice. Now it is yet to see who wins this race.

If the PM decides to appoint his Special Assistant on Revenues, the premier will have to take the decision on what would be his reporting line. Will Special Assistant to PM on Revenues would report to Dr Abdul Hafeez Shaikh first and then to PM and how much powers he would have to appoint the team of his choice into the fold of the FBR.

After finalising all these arrangements, the government would make the announcement for appointing the chairman FBR on permanent basis. The provisional data showed that the Federal Board of Revenue (FBR) has so far collected Rs2,714 billion during the July-Feb period of the current fiscal year 2019-20 against the revised downward target of Rs 3,039 billion, so the shortfall stood at Rs325 billion. The shortfall has been widening with every month as it widened by Rs107 billion in February 2020 and ballooned from Rs218 billion in the first seven months to Rs325 billion in eight months.

At the existing pace, the revenue shortfall might rise to over Rs700 billion in achieving the revised target of Rs5,238 billion on June 30, 2020. The FBR had envisaged tax collection target of Rs5.555 trillion on the eve of the budget for 2019-20 but after completion of the first review and release of second tranche under the IMF program, the government had slashed down the FBR target in writing from Rs5,555 billion to Rs5,238 billion, so monthly and quarterly targets also got reduced accordingly.

“The FBR has provisionally collected Rs310 billion in February till Feb 28, 2020 against the desired target of Rs417 billion, indicating a massive shortfall of Rs107 billion alone in one month (Feb 2020),” a top official confirmed to The News here on Friday night. The FBR high-ups claimed that the revenue collection might go up to Rs330 billion as some revenue collection could be seen in the pipeline of different revenue collection avenues.

The FBR would have to collect Rs2,199 billion in the remaining four months (March-June) period in order to display its downward revised target of Rs5,238 billion on its board on June 30, 2020.

On an average, the FBR will have to collect Rs550 billion every month for achieving its desired target but so far the FBR was able to collect Rs300 to Rs320 billion on monthly basis, so a massive shortfall seemed on the cards.

During the recently-concluded staff level agreement, the government made a fresh request to further slash down the FBR target from Rs5,238 billion to Rs4,800 billion but the FBR high-ups were tight-lipped and they did not want to make any comment on this subject. "Please wait till April 10, 2020 when the MEFP is finalized and released after the approval of IMF’s Executive Board," said one official.