FEDERAL BUREAU OF REVENUES (FBR) HAS FAILED TO MEET ITS TARGET FOR THE FISCAL YEAR OF 2011-12
July 9 - 15, 2012
Despite all its claims and assurances, the FBR has failed to achieve the revenues collection target of Rs.1952 billion for the financial year of 2011-12 ending on June 30 It missed the target by Rs 43billion. Experts believe that the FBR will have to downscale its envisaged tax collection target of Rs.2381 billion during the fiscal year of 2012-13 in the wake of witnessing a shortfall despite its best efforts. Even senior officials of the FBR believe that "the basis of the envisaged target for the current year that started from July 1,2012 has fallen apart after witnessing a shortfall during the outgoing year despite our best efforts,"
Even the efforts during the last month of the outgoing fiscal year in terms of receiving advances or stopping payments of refund to show as improved tax collection, it failed to serve its purpose. According to inside information the provisional collection by the FBR has collected RS 1885 billion and only Rs 24billion could be added through the aforementioned efforts bringing the total to Rs 1909 billion. As quoted by a senior official adding that the overall collection might touch the figure of Rs 1912 billion till the finalizing the revenue figures during the next few days.
According to FBR sources the fiscal year of 2012-13 may be slightly better as the government has imposed a Capital Gains Tax on the sale and purchase of property as "we hope to collect about Rs 5billion through this measure during the running financial year .î But still we will be far away from meeting the envisaged revenue collection target Rs.2381 billion---more than Rs 400 billion over the actual collection during the outgoing fiscal year.
Lauding the efforts of the FBR to manage a substantial increase in†revenue collection, the chief Islamabad Chamber of Commerce and Industry rightly advised the government to bring all untaxed sectors into the tax net and exploit the true tax potential of the country which was certainly much higher than Rs 200 billion. What was really needed was to have a fair and equitable tax policies for revamping tax collection system and pulling the economy out of the present crisis. He stressed that the government should develop a comprehensive strategy to broaden the tax base and rationalize tax rates so that people can happily contribute towards paying taxes. According to experts the real tax potential of Pakistan, by a conservative estimate, is over Rs4000 billion, he added.
The incumbent Finance Minister, Abdul Hafeez Shiekh, has publically confessed and complained a number of times that rich and influential people in Pakistan were not prepared to pay any tax. He made a special reference to the fabulously rich landed aristocracy of Pakistan. In this respect as a result, the tax to the GDP ratio in Pakistan was the lowest in the world at 10percent against an average of 25 percent in the world and 16 percent in the region While this ratio has been rising around the world ,it has declined to about 10 percent now from 13 percent five years back.
Independent economists, the IMF and the World Bank experts have repeatedly observed that due to the present economic situation in Pakistan it was criminal to keep farm income out of the tax net, but the powerful feudal lobby has always tactfully and successfully defied all attempts so far to bring this highly potential segment of our economy into the normal tax net.
According to experts agriculture tax has immense potential to generate billions to ease the economic difficulties of the country.
Imposition of tax on income from agriculture has been an issue since the inception of Pakistan, but the grouping amongst the feudal lords and civil and military bureaucrats have successfully managed to keep out of tax net.. Every voice. demanding imposition of tax on income from agriculture has been given harsh treatment by the rulers. The latest example is of the former Finance Minister, Shaukat Tareen in the present PPP led government once vowed to levy tax on income from agriculture, however he was so badly hounded by the feudal lords dominating the Parliament that he had to quit his job. Last year, despite acute financial difficulties, the present government opted to surrender an IMF package because it also wanted tax on agriculture income in its reform program which Pakistan was required to undertake as a condition for its IMF aid package.
In April last year the Finance division submitted a summary to the government suggesting an imposition of tax on income from agriculture starting from the fiscal year 2012-13 .in view of acute financial difficulties. It was ,however out rightly rejected .On publication of such reports in a section of press, the Finance Minister ,Hafeez Sheikh announced, at a press conference that no new tax will be imposed in the coming budget. Once again the powerful feudal lobby has succeeded.