Rs 3.621 trillion collection target unrealistic: FBR chief briefs Senate body

Chairman Federal Board of Revenue (FBR) Nisar Muhammad Khan, while terming the revenue collection target of Rs 3, 621 billion as unrealistic, has informed the Senate Standing Committee on Finance that the FBR has so far no plan to enhance customs duty on the import of items during the ongoing fiscal year (2016-17).
During the proceedings of the Committee, the FBR Chairman dropped a hint that FBR might like to see increased sales tax rate on petroleum (POL) products as its revenue collection declined because of one-fourth reduction in tax collection on petrol and diesel. "If we used to collect Rs 100 through POL products in last fiscal year, it had now reduced to Rs 75 in the current fiscal year with decreased sales tax rate and volume of POL products and other imported items," he highlighted.
Briefing the Senate Standing on Finance which met under chairmanship of Senate Saleem Mandviwala here at the Parliament House, the Chairman FBR said that certain bases of envisaging the target of Rs 3,621 billion were changed as the sales tax rate of 17 percent on fertiliser was brought down to 5 percent and the FBR had not assumed that the sales tax rate on POL products would also be slashed down.
When annual tax target of Rs 3,621 billion was set for 2016-17, the FBR accepted the ambitious target which was higher by over 18 percent as compared to collection of the last fiscal year, he informed. The FBR had achieved growth of 21 percent in revenue collection during 2015-16. Senator Mandviwala said that the tax target of Rs 3,621billion was unrealistic so the FBR should raise its voice against it because it had to face the music by the end of the day.
He said the tax collection targets are met only through squeezing the existing tax payers and all governments are not giving realistic revenue collection figures. "This is a bad tradition by all governments including ours and it has resulted in an altogether false statement. Even the budget deficit figures are incorrect," Mandviwala said.
He said that the FBR only ''grills and grinds'' the existing tax payers to meet the targets. "What have you done to the non-tax payers? They are all at ease but those paying taxes have to bear the brunt of your hard-handedness only because you need to meet the targets," he said. The FBR officials disagreed to the observations of Mandviwala about taking taxes in advance from private sector.
"I can even give names of private entities which have paid their taxes to the FBR for the next three to six months. This results in a shortfall in future and all such mismanagement is done to manage the numbers," alleged Mandviwala. Explaining reasons for facing shortfall in the first quarter (July-Sept) of the current fiscal year, the Chairman FBR said that the declined oil prices and government''s decision to keep the prices unchanged, reduced sales tax rate on petrol and diesel, decreased imports, and stalemate on property valuation and banking transaction negatively impacted the revenue collection as the FBR''s collection stood at Rs 625 billion, achieving growth of 6 percent against desired target of over 18 percent.
The committee also raised concerns over rampant misuse of monetization of car policy and decided to summon Cabinet and Planning Divisions before it to ascertain flaws in the ongoing policy where bureaucrats of grade-20 and above are getting Rs 65,000 to Rs 120,000 but the fuel and maintenance bills of ministries/divisions are not coming down, the committee members said.
During the last PPP-led regime, the government had approved monetization policy with the objective to avoid misuse of official cars as well as reducing the fuel bills of the ministries. The chairman of the committee noted that the misuse of official cars was going on without any doubt as fuel bills of all ministries and departments were increasing every year, which clearly indicated that the monetization policy had failed to deliver so it needed to be reversed.
Senator Usman Saifullah said that there was a need to withdraw Rs 5,000 currency note to abolish big currency notes. Committee members including Senator Nasreen Jalil, Senator Kamil Ali Agha and Senator Ayesha Raza Farooq acknowledged that real budget deficit would be much higher than what is shown in the papers. The members observed that the Committee should propose withdrawal of provisions of Income Tax Ordinance which allow FBR to seize the bank account of any taxpayer.