ISLAMABAD: The Federal Board of Revenue (FBR) has once again failed to meet its revenue collection target of Rs3.935 trillion, falling short by Rs90 billion for the financial year 2017-18.
The parliament last year originally approved a revenue collection target of Rs4.103 trillion, which was revised downwards to Rs3.935 trillion a few months ago.
Provision figures of revenue collection stood at Rs3.844.5 trillion at end of outgoing FY18.
Due to missing the revised revenue collection target of Rs3.935 trillion, the budget deficit could likely surpass 7 percent, although the final figure for FY18 is yet to be finalized, reported a National daily.
According to sources in the FBR, the revenue collection figure of Rs3.844.5 trillion includes Rs100 billion fetched through the tax amnesty scheme.
The deficit would further increase to Rs190 billion for FY18 if revenue realizations from the amnesty scheme of Rs100 billion get excluded.
Top officials of the FBR also provided a special briefing to Finance Minister Dr Shamshad Akhtar regarding the revenue performance of the tax machinery during FY18.
Dr Akhtar apprised the officials that money fetched from the tax amnesty scheme wasn’t a feather in the cap of the tax regulator.
Also, sources in the FBR shared the finance minister had sternly told the FBR’s top brass from providing the revenue collection figure details to the media.
The tax regulator amassed Rs1.7 trillion or 45 percent of overall revenues at the import stage for the just concluded financial year 2017-18.
A revision in the tax structure in the last five years has resulted in a condition in which 58 percent of sales tax and 14 percent of income tax was collected at import stage during FY18,
Out of the Rs3.841 trillion tax receipts, Rs90 billion have been received from offshore and domestic tax amnesty schemes.
Total collection for FY18 was 14.2 percent higher than the previous FY17 and the country’s tax-to-gross domestic product marginally rose to 11.1 percent, which was lower than the target set.
From the overall receipts, Rs1.7 trillion were collected at the import stage comprising of customs duty, federal excise duty (FED), withholding and sales tax.
Income tax collection at import stage was recorded at Rs220 billion, sales tax Rs855 billion, customs duty Rs610 billion and federal excise duty at Rs15 billion.
This policy of tax collection at the import stage is faulty since this would harm economic growth due to the rising cost of goods.
Also, factory output would be affected which would result in lesser sales, which forces manufacturers and importers to reclaim these taxes from consumers by adding them in the cost.
Around 70 percent of the tax regulator’s workforce constitutes of offices from IRS, however, they only collect around 55 percent of taxes.
As per sources, sales tax receipts stood at Rs1.488 trillion for FY18, lower than the projected target of Rs1.6 trillion set by the parliament.
And the collection at import stage was recorded at 58 percent of total sales tax or Rs855 billion.
Custom groups collect it but constitute part of the IRS’s performance.
The sales tax collection five years ago at import stage was 51 percent which per sources indicated leagues at the domestic stage.
The FBR’s income tax collection was recorded at Rs1.53 trillion in FY18, resulting in a Rs67 billion deficit than the target set.
Withholding taxes constituted 14 percent or Rs220 billion of the collection at the import stage.
Although the withholding tax is retrieved from the consumers but is declared as a contribution by importers.
Ironically, the share of overall income tax collection was two-percentage point lower than five years ago, which stood at 39 percent for FY18.
Interestingly, the FBR amassed around Rs218 billion in federal excise duty. Roughly 95 percent of the duty was collected at the domestic stage, revealed sources.
The federal excise duty collection missed its target by Rs15 billion and customs duty collection was recorded at Rs610 billion, surpassing the target by Rs29 billion.