LTUs, RTOs asked to give estimates, but no targets: major shift in FBR tax policy

The Federal Board of Revenue has made a pragmatic shift in the tax policy by empowering the Chief Commissioners of LTUs and RTOs to give their revenue estimates for 2011-12 instead of fixing monthly and quarterly revenue collection targets by the Board. Sources told Business Recorder here on Friday that FBR Chairman Salman Siddiq has introduced a major change in the tax policy, which has been termed as realistic by the Chief Commissioners of the LTUs/RTOs.
Under the new tax policy, the concerned Chief Commissioner of each LTU and RTO would give budgetary estimates and actual potential of tax collection. The field formations would themselves work out the revenue estimates as per benchmarks decided in the Chief Commissioner Conference on August 4, 2011.
According to the sources, it is a very big change in the FBR that the tax authorities are asking the field formations to give their revenue potential to ascertain whether the FBR will be able to meet the annual target of Rs 1952 billion during 2011-12. This total change in the tax policy introduced by Salman Siddiq has been highly appreciated by the Chief Commissioners of the LTUs/RTOs.
This is for the first time in the history of the FBR that the tax authorities are asking the Chief Commissioner of each LTU and RTO to submit the revenue estimates based on the rate of inflation, economic growth and their efforts in enforcement, demand creation, audit and bringing new taxpayers into the net. These estimates will be reviewed at the FBR headquarters and subsequently revenue estimates for 2011-12 will be finalised.
Based on the revenue estimates to be submitted by the field formations, the FBR will inform the Ministry of Finance about the tax estimates as compared to the revenue collection target of Rs 1952 billion fixed by the government. Secondly, the FBR will also be in a position to inform the Ministry of Finance that the LTUs/RTOs gave numbers, which may differ the revenue estimates of Rs 1952 billion fixed for the FBR.
Sources said that once the Chief Commissioners of the LTUs/RTOs would submit the realistic revenue estimates, the FBR can question in cases of revenue shortfall. The revenue targets would be fixed for the field formations based on their own estimates and the tax authorities can ask the heads of the LTUs/RTOs for reasons of not achieving the estimates which were originally given by the field formations.
The FBR can also fix responsibility on the tax officials, who would be unable to meet the revenue collection targets, which were fixed by them. The FBR can further ask the Chief Commissioners of LTUs and RTOs to explain reason for not achieving the target which were given by them on the basis of working in the field formations.