An official source privy to the board-in-council (BIC) meeting held here on Monday told Dawn that FBR Chairman Salman Siddique has asked tax members to clear arrears for bridging the shortfall to reach a conservative total by end June 2011. — File Photo

ISLAMABAD: Facing an imminent shortfall in revenue collection, chairman, Federal Board of Revenue, on Monday asked top tax officials to work out a mechanism to expedite clearance of around Rs150 billion revenue stuck up in litigation for the past few years, an official source told Dawn. The tax machinery will have to collect Rs568 billion at any cost in the last quarter (April-June) to reach the downward revised revenue target of Rs1588 billion by end June 2011.

Tax officials have collected Rs1020 billion during the past nine months of the current fiscal year.

But experts estimated that this target seems unlikely keeping in view the paltry growth in revenue collection despite the fact that revenue target was revised downward thrice.

An official source privy to the board-in-council (BIC) meeting held here on Monday told Dawn that FBR Chairman Salman Siddique has asked tax members to clear arrears for bridging the shortfall to reach a conservative total by end June 2011.

“We need this revenue as revenue is not coming from other sources,” the chairman remarked.

An official in the finance ministry said that the revenue collection will hardly reach Rs1500 billion marks. Even the IMF has also informed the Pakistani officials that the Rs1588 billion revenue target is unlikely to be achieved.

A review team of the International Monetary Fund (IMF) is also expected to visit Pakistan in the first week of May to discuss the next year 2011-12 revenue target along with revenue measures to be taken in the upcoming budget.

The tax target was revised from Rs1604 billion to Rs1588 billion despite mid-term revenue measures including withdrawal of exemptions on agriculture products through presidential ordinances.

As per FBR estimations, it was projected to raise an amount of Rs25 billion from 15 per cent one time surcharge on income tax payable during the tax year 2011, and another Rs25 billion would come to the government’s kitty from withdrawal of exemptions of sales tax from fertilizers, pesticides and input tax on agriculture tractors and raising of special excise duty to 2.5 percent.

According to the official, the revenue collection in the month of April will determine whether the tax officials will be in a position to reach the target or not.

Shortages in gas and electricity also lead to low revenue collection, the official said, adding the highest ever food inflation also diverted maximum budget of taxpayers to food items, which did not attract general sales tax.

As a result, the revenue from general sales tax also did not yield substantial growth.

The large scale manufacturing sector which contributes maximum portion in revenue collection also witnessed a negative growth during the past eight months of the current fiscal year. And low pace of growth in economy also leads to low revenue collection.

However, the most worrying factor for the government will be that customs duty has witnessed a negative growth since February following massive growth recorded in the previous months.

“This is the imminent fallout of the massive reshuffle of all most all collectors and other senior officers of the tax machinery in the mid-fiscal year”, a senior tax official commented.

In the current fiscal year, income tax collection largely remained short of the target followed by the federal excise duty. The only taxes that posted growth were the customs duty and general sales tax collection. The customs growth was because of rising import volume, while the sale tax collection partly because of higher collections at import stage and double digit growth in inflation that dragged collection at domestic sales.

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