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FBR chief says amnesty scheme key to meeting Rs2.3tr tax target

Published Nov 23, 2012 09:26pm

FBR-670
Federal Board of Revenue (FBR) logo. — File Photo

ISLAMABAD: Conceding a shortfall in revenue collection this year, Federal Board of Revenue Chairman Ali Arshad Hakeem said on Friday that meeting the tax collection target of Rs2.381 trillion depended on the implementation of tax amnesty schemes.

Giving a briefing to Minister of State for Finance Saleem H. Mandviwala, he said the FBR could not achieve the target because performance in the first four months of the current fiscal year was dismal.

He suggested implementation of the amnesty schemes which would yield Rs100bn and help cover the estimated shortfall in collection this year.

Mr Hakeem said that if the amnesty schemes were not approved by parliament, the FBR could hardly manage to collect Rs2,194 billion which would mean a shortfall of Rs187bn by June 2013. This shortfall will further increase budget deficit.

Mr Hakeem said a bill relating to the amnesty schemes was expected to be tabled in the next session of the National Assembly, scheduled to begin on Dec 3.

“We will not introduce the schemes through an ordinance,” he said.

The tax amnesty scheme was first introduced for the stock market through an ordinance for a period of three months and made part of the Finance Act 2012 as part of budget documents.

At the time of calculation of revenue projection for the 2012-13 year, the budget makers have not included the revenue to be generated through amnesty schemes.

Now to make up for the inefficiency of the taxation machinery, the FBR chairman who was appointed from private sector for a contract of two years was looking for the amnesty schemes to raise easy money and avoid criticism from within the tax department over his appointment on the prestigious post.

Citing reasons for the shortfall, including changes in the growth pattern, Mr Hakeem said the number of personal income taxpayers would be increased along with the compliance level.

He said the customs department had collected the data of 2.3 million vehicles registered on fake documents.

He said the chassis no of 311,000 vehicles had been changed and about 450,000 luxury vehicles had been registered on forged documents.

The chairman said the customs department was investigating the matter and had also launched a crackdown.

FBR senior member Israr Rauf said the tax-to-GDP ratio would increase to 13 per cent from 12 if the amnesty schemes were implemented.

But budget-makers had projected a tax-to-GDP ratio at 10pc if the FBR managed to achieve the original revenue target of Rs2.381tr.

The FBR chairman said implementation of the amnesty schemes would help to achieve a tax-to-GDP ratio of only 10pc.

Mr Rauf said only 40pc of registered companies, 25pc of association of people, 28pc businessmen and 68pc salaried class were filing tax returns with the FBR.

He said that 3.1m potential taxpayers had been identified who would be brought into the tax net through the amnesty schemes.

At present, only 1.4m filed tax returns.

The FBR chairman said no tax auditing would take place in future on the basis of balloting.

He called for financial autonomy of his department. The chairman also sought early approval of 100 posts approved by the prime minister.