ISLAMABAD, Jan 31: The Federal Board of Revenue (FBR) has decided to review its revenue collection position early next month following a massive shortfall experienced during the first six months of 2007-08.
“We will have to review our position in February to determine whether there is a need to revise downward our Rs1.025 trillion revenue collection target set for the current financial year,” FBR chairman Abdullah Yousuf told Dawn here on Thursday. He conceded that the slowdown in economy and an unprecedented violence witnessed after the assassination of Ms Benazir Bhutto affected the revenue position of the FBR.
“The remaining five months are very crucial for collecting sizable revenues,” said the FBR chairman, adding a number of factories had been burnt which may affect their ability to pay taxes.
He said there were problems in the manufacturing sector which has not been able to pay its taxes considerably because of various reasons, including violence in December last and load-shedding.
He, however, said that the Rs36 billion revenue shortfall witnessed in the first six months has been covered up to some extent and now it stands at Rs30 billion in the month of January this year.
However, Mr Yousuf said his organisation would make all-out efforts to meet its annual revenue collection target by June 30, 2008.
“Let us admit that things are not very easy on the revenue front.”
The FBR chairman said that revenue collection position which had doubled during the last five years was witnessing problems due to overall security situation. But he hastened to add that the current 11 per cent tax-to-GDP-ratio would be maintained as things are expected to improve after some time.
Responding to a question, he said the FBR’s restructuring would be completed by December 2009 for which the World Bank and the Department for International Development (DFID) of United Kingdom were providing $150 million funding.
A lot of work, he said, had been done but still some more was to be accomplished in terms of removal of leakages and introducing full automation in the organisation.
In reply to a question, Mr Yousuf said that the customs had totally been automated while this automation would shortly be introduced in income tax, sales tax and excise duty departments.
The customs department, he pointed out, has been streamlined and the businessmen dealing with it were largely satisfied about it.
He said full automation had also been achieved in the State Bank of Pakistan and the National Bank of Pakistan (NBP), and they were maintaining FBR accounts.
“We are trying to provide one-window service to all the tax-payers whose number in the next five year would be doubled to about 4 million,” he said.
He said that 13 regional tax offices and three large tax payers units each in Karachi, Lahore and Islamabad were providing adequate service to tax payers. In this regard, he referred to data warehouse which, he said, was the key to the whole issue. The electronic filing of income tax returns has tremendously facilitated tax payers and that the system was working satisfactorily, he added.
To another question, the FBR chief said that self-assessment scheme was being further reformed to follow international revenue collection system. Inter-action between tax officer and tax-payer has significantly been removed which was why complaints about corruption had greatly been minimised.
In reply to a question, he admitted that there was a parallel economy in the shape of informal sector which needed to be brought in the tax net.
This informal sector would gradually and slowly be persuaded to pay its due taxes for which we would never resort to the policy of harassment and coercion as was the practice some years ago,” the FBR chairman said.