Tax authorities face revenue shortfall of Rs65bn in 6 months

ISLAMABAD: Tax authorities are facing massive revenue shortfall of Rs65 billion during the first six months (July-Dec) period of the current financial year 2012-13, said sources.

Keeping in view this massive shortfall, the sources indicate the possibility of key changes in the tax collection machinery in the coming weeks and months. There are some distortions in the existing administrative arrangement that is causing heavy price in terms of revenue collections, they said.

The FBR’s revenue shortfall of such extent will have far reaching negative impact on the country’s overall fiscal position because the improved performance on account of non-tax revenues by reimbursement of $688 million by the United States under the Coalition Support Fund (CSF) will be neutralised, causing hike in the budget deficit figures in the current financial year, they said.

On account of the CSF reimbursement of $688 million, Washington has bailed out the incumbent regime for blown out of full-fledged crisis till the completion of its tenure up to March 2013 but this breathing space will prove temporary for avoiding twin deficits crisis, including the budget deficit and the balance of payments crisis by the fourth quarter (April-June) period of the current fiscal year, said sources.

“Yes, we are facing huge shortfall in the first half of the current fiscal year but the proposed scheme (tax amnesty) currently under consideration by the parliament can bridge this gap easily in case of getting approval,” said Ali Arshad Hakeem, chairman of the FBR, when contacted by The News on Wednesday.

However, the sources attributed this shortfall largely to continuous strife in the main hub of economic activities in Karachi that resulted in halting the wheel of economy in a major way, lingering energy crisis and reduction in imports of certain revenue potential items.

The FBR had so far collected Rs901 billion in the first six months of the current fiscal year and is hopeful that this collection would go up to Rs906 billion by adding Rs5 billion more after accomplishing book adjustments.

In December 2012, the FBR collected Rs211 billion and Rs5 billion more are expected to come in the national exchequer, said sources.

In the first five months (July-Nov) period, the tax collection stood at Rs690 billion. “We have not taken any advances to give a spin that the FBR is doing wonders by collecting its envisaged target against the practice done in the last financial year as alone on January 14, 2012 the previous management had taken Rs14 billion in advance to show improved collection,” said an official of the revenue body.

Sales tax collection in December 2012 stood at Rs68.197 billion against Rs70.586 billion in the same period last year, reflecting a decline of 3.39 percent, whereas the federal excise duty (FED) collection stood at Rs8.795 billion against Rs8.618 billion, showing an increase of 2.05 percent.

Data compiled by the Federal Board of Revenue revealed that the net sales tax collection on domestic consumption was Rs36.068 billion during December 2012 against Rs36.790 billion in December 2011, showing a fall of 1.96 percent.

Sales tax collection on imports was Rs32.128 billion against Rs33.795 billion, showing a decrease of 4.93 percent. FED collection at the local stage and domestic supplies was Rs8.413 billion during December 2012 against Rs7.865 billion in the same period last year, showing a growth of 6.97 percent, and FED collection at the import stage was Rs382.74 million against Rs753.63 million, showing a decline of 49.21 percent.

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