ISLAMABAD: Despite a revision of the revenue collection target for 2017-18, the Federal Board of Revenue (FBR) saw a shortfall of Rs90 billion.

The provisional revenue collection reached Rs3,844.5bn, which is lower than the target set at Rs3,935bn. The FBR had initially targeted a total collection of Rs4,103bn for the fiscal year.

As a result of this massive shortfall in revenue, the budget deficit is likely to cross 7pc though the figure for the outgoing fiscal year is yet to be finalised.

The budget deficit was 6.5pc — excluding the circular debt settlement amount — when the PML-N government took over in 2013.

Well-placed sources in the FBR told Dawn that the revenue collection also includes Rs100bn tax raised, which can directly be attributed to the amnesty scheme.

The outgoing PML-N government announced a one-time tax amnesty scheme for taxpayers to clear their domestic and foreign assets.

The exclusion of the revenue realisations from the scheme would further enhance the overall shortfalls to Rs190bn in 2017-18.

The caretaker Finance Minister Dr Shamshad Akhtar was also given a special briefing on the revenue performance by top officials of the FBR. The minister categorically informed the board that money raised from amnesty scheme should not be counted as a feather in the cap of the FBR, as it was due to the amnesty scheme’s incentive.

Customs duty collection posted more than 20 per cent growth during the outgoing fiscal year, which has emerged to be the only federal tax that exceeded expectations. The performance of Inland Revenue - income tax, sales tax (domestic) and federal excise duty - was sub-par.

The sources in the FBR confirmed to Dawn that caretaker finance minister strictly prohibited the board’s top officials from sharing the details of the revenue figures with the media. Therefore, despite a lapse of six days, the FBR has not officially released the details of revenue figures.

According to the sources, the performance of most of the regional tax offices (RTOs) along with few large taxpayers unit (LTU) in terms of revenue collection remained far behind the projected target.

The sources said that most of the officers in these offices were posted on the recommendations of the previous regime, headed by former finance minister Ishaq Dar. In some cases, these officers remained at their current positions for many years.

Another said that the Election Commission of Pakistan is also awaiting response from the FBR for reshuffling top tax officials in the field as part of the upcoming elections. So far, the provincial governments have transferred more than 2,000 officers in the four provinces.

The sources said that it was in this background that the finance ministry passed on the increase in petroleum oil lubricant (POL) products proposed by the Oil and Gas Regulatory Authority to the end consumers. Moreover, the rate of sales tax was also enhanced to cover up the shortfall in revenue collection in June.

According to a source in the finance ministry, the increase in POL products was also unprecedented and the minister wanted to cover up the shortfall in revenue through increase in sales tax rates.

The FBR has also withheld genuine refunds of exporters to show good figures.

Published in Dawn, July 7th, 2018