FBR to collect Rs80bn from taxpayers through SROs

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KARACHI: In a desperate move to meet the revenue collection target for the current fiscal year, the Federal Board of Revenue (FBR) has placed a burden of Rs70 to 80 billion on taxpayers with the issuance of different notifications since February 2013, official sources said on Monday. The FBR has provisionally collected Rs1.34 trillion between July 2012 and March 2013. It needs to collect Rs782 billion in the remaining three months of the fiscal year to meet an already reduced revenue collection target of Rs2.13 trillion.

The revenue collection target has been changed twice this year from an initial figure of Rs2,381 billion.Considering where revenue collection stood at the end of the first quarter, the FBR realised that the pace of revenue collection could not gain momentum, report sources. They also said that the FBR was facing difficulties in introducing new measures during the last government’s tenure due to upcoming general elections.

The revenue shortfall was also imminent as the FBR obtained advance tax from different sectors to meet the revenue collection target in the last fiscal year, which it subsequently returned to companies at the start of the current fiscal year.To hide its shortcomings, the FBR resorted to the old method of issuing Statutory Regulatory Orders (SROs) for revenue generation, report sources.

Revenue collection up to March 2013 shows a nominal five percent increase from Rs1.28 trillion in the corresponding period of the last fiscal year, when the total stood at Rs1.88 trillion. With a five percent rise in collection, the FBR is unlikely to reach Rs1.98 trillion, signalling a shortfall of Rs146 billion this fiscal year.

Since February 2013, the revenue body has issued 17 different SROs. The breakdown revealed that five SROs have been issued regarding income tax, 11 regarding sales tax and one regarding federal excise.

The sources said that remaining shortfall would be bridged through already launched amnesty schemes in customs, the legalising of smuggled vehicles, and another in sales tax, relaxing the condition for making payment. Moreover, another amnesty scheme is likely by the end of May or start of June 2013. Sources say that taxpayers will be given the chance to pay their principal amount while additional tax, surcharges, fines and penalties will be waived.

Senior tax officials believe that enhanced collection is the need of the hour, considering the fiscal deficit and quest for another IMF loan. An official said that the revenue authorities had failed to comply with the requirement stipulated under the terms of the last IMF loan programme, which called for reforming the taxation system, broadening the tax base and increasing the pace of collection.

The business community has reacted strongly to the FBR’s decision to squeeze existing taxpayers, who are already suffering from poor security conditions, an energy crisis and political instability.

Haroon Agar, president, Karachi Chamber of Commerce and Industry (KCCI), has expressed resentment for these measures, stating that the government is punishing honest taxpayers, instead of recovering taxes from evaders who were unveiled by the FBR. “There are many other ways to raise revenue collection but the FBR did not bother to consult stakeholders,” he added.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said in a statement: “We need friendly policies to boost our businesses but it is unfortunate that the authorities are creating more irritants to retard the economy.”


Courtesy: The News

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