CBR has to collect Rs. 194
billion during the next 5 months
From Shamim Ahmed
Feb 28 - Mar 05, 2000
At the end of first seven months of the current fiscal year the Central
Board of Revenue (CBR) has been able to collect only Rs. 185 billion net revenue. In order
to achieve the year's target of Rs. 379 billion it would need to muster Rs. 194 billion
during the next five months which is, by any standard, an uphill task.
The average monthly collection required for the next five months comes
to Rs. 39 billion as against Rs. 26 billion during the outgoing seven months and actual
collection of Rs. 24 billion during January 2000. The first half of the current fiscal
year had ended with a total collection of Rs. 160 billion or a monthly average of Rs. 26.6
billion. The seemingly complacent CBR claimed that the first six months of the financial
year are always sluggish and hoped that revenue collection would certainly improve during
the remaining six months. Contrary to their hopes and expectations January 2000 proved to
be most disappointing at Rs. 24.9 billion.
The revenue target for the current financial year was initially set at
Rs. 356 billion against last year's actual receipts of Rs. 308 billion, which was a
substantial increase. Then this target was moved to Rs. 379 billion as new post-budget
additional resource mobilisation measures were announced. Now increasing revenue by about
Rs. 71 billion over last year's target remains a challenging task.
It may be recalled here that the CBR had failed to achieve the target
of Rs. 356 billion of tax revenue in the last financial year which though was subsequently
revised downwards yet the actual collections in 1998-99 did not exceed Rs. 308 billion. It
may further be pointed out that the pursuit of tax defaulters and dodgers reached a
crescendo since October 1999 onwards following the dismissal of the government of Nawaz
Sharif by the armed forces of the country and yet the tax target for the current fiscal
year has failed to be realised. The target for 1999-2000 seemingly envisages a 23 percent
increase from the actual tax revenue receipts of the last financial year but the actual
performance for first seven months reflected only a 4 percent increase compared with the
receipts of the comparable seven months of 1998-99. Thus the targeted increase in tax
revenue would appear to be a hard nut to crack for the CBR.
It appears that lack of adequate growth in tax revenue despite the well
planned projections, has compelled the present government to resort to an unpalatable
course of downisizing the personnel and staff of the various government departments.
According to reports, the axe has not spared the CBR and its departments from wthere over
3,000 employees have been laid off last month and more posts are likely to be abolished
It may be emphasized here that in view of the expected expansion in the
sales tax department's staff in the wake of the proposed imposition of GST on a wide front
including the retail trade, the staff now declared surplus may be absorbed to manage the
full-fledged operation of GST. Thus what is important is the need to broaden the tax net
in respect of both direct and indirect taxes which alone would be the right answer to the
problem of lower tax collections. The downsizing can hardly be expected to yield any
significant savings in expenditure. However, the pending cleansing of the various
departments by removing officers and staff suspected of corrupt practices would have to be
carried out without any hesitation.
The tax revenue which accounts for a very low ratio of 13 percent of
GDP, continues to be the main cause of poor resource position of the government with the
result that the development efforts in addition to the government's capability to service
its domestic and foreign debts have remained far from satisfactory over the last several
years. On the other hand the dependence of the government on domestic and foreign
borrowings has increased. The problem of widening in the budget deficit was tackled lately
by regularly slashing the development budget which is indeed a negative course and
contrary to adopting ways for appropriate increase in tax revenue.
The Chief Executive, General Pervez Musharraf, who visited CBR last
month to review the performance took serious note of this sluggish trend. He directed the
Chairman CBR to submit to him a monthly report on revenue collection. He also directed the
CBR to create a monitoring system meant to report on monthly performance on collection of
taxes and disposal of references sent to CBR for processing. The monitoring of tax
collection would also involve analyses of the potential of deposits in each area and
sector, and the performance (input) of the individual officials given the responsibility
for improving the collection.
The task assigned to CBR can be accomplished but not without revamping
taxation system, restructuring the department and a close and vigilant monitoring system.
The government income must outrun its expenditure to strengthen the economic foundation of
the country. The successive governments have imposed new taxes of about Rs. 400 billion
since 1998. A question can well be posed to CBR officials as why these additional taxation
measures not reflected in government revenues.