Tax experts have blamed the anti-growth fiscal policies of the government carrying a direct negative bearing on revenue growth. They said 18 percent growth in revenue is beyond comprehension unless the targets are realistically fixed. Commenting on the reduction in revenue target by Rs 100 billion for the current fiscal, they said the Federal Board of Revenue (FBR) has already registered a shortfall of Rs 168 billion during the first nine months of current financial year. This would be escalated further to Rs 198 billion in April 2017, they added.
It may be noted that Pakistan has made it clear to the IMF that it could only collect Rs 3.5 trillion against the actual target of Rs 3.6 trillion by 30th June 2017. Special Assistant to Prime Minister on Revenue Haroon Akhtar has attributed this revenue shortfall to the changes in policies in the post-budget scenario.
The fiscal experts have expressed their doubts over the availability of FBR to collect approximately one trillion rupees during the remaining two months of the current fiscal.
When asked to identify and analyze the policies being referred by the Special Assistant to the Prime Minister on Revenue, they said it would not be out of place to mention that the FBR did not have a permanent Chairman since January 2017. The government has elevated one of its members as Chairman on the pretext that he would achieve the target.
They said this optimism took birth from a wrong perception that he was responsible for meeting the target of Rs 3.2 trillion in the fiscal year 2015-16. The fact, however, is that on the front of domestic revenue, the collection fell short of the target and was compensated with extra collection on imports which did not fall under the jurisdiction of the said member.
They said the Special Assistant to PM on Revenue was not fair in attributing revenue shortfall to policy measures than questioning the ability of Chairman to meet its responsibility with regard to revenue target.
According to the tax experts, one of the important policy measures initiated by the government was announcement of zero rating facility to the five export-oriented sectors in January 2017. They said this measure could not be held responsible for revenue shortfall as the FBR was collecting not more than Rs 3 billion from these sectors which were supposed to be refunded once these goods are exported. They said the premier's advisor has conveniently been forgotten that the FBR is still sitting over payable refunds which amount to more than Rs 30 billion for the pertaining two years, 2014-15 and 2015-16, only in the textile sector.
They said most of the notifications relating to exemptions pertain to the imports under the China Pakistan Economic Corridor (CPEC). They said no data of such exports has been shared therefore one cannot evaluate the negative impact of these exemptions on the revenue.
They further pointed out that imports for the CPEC relate to the energy and construction sectors which lead to new jobs and increase in the purchasing power. They said any such situation would also generate demand in the market that would lead to more industrial growth of consumer goods. Therefore, they added, an attribution to such industrial imports for slowing down revenue generation by the Special Assistant to the PM on Revenue is a misplaced argument. On the other hand, tax experts said the government has imposed more than 33.5 percent ad valorem especially on diesel against the normal rate of 17 percent.
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