ISLAMABAD - The Federal Board of Revenue (FBR) is struggling to achieve the revised revenue collection target of Rs 2,050 billion during the ongoing financial year 2012-13 owing to the slowdown in the economy due to the energy crisis and poor law and order situation.
The FBR has collected Rs 1510 billion in ten months (July-April) of the year 2012-13 and has to further collect Rs 540 billion in just two months (May and June) to reach the revised target of Rs 2050 billion, which seems challenging to achieve. "Federal Board of Revenue (FBR) is working to achieve the revised revenue collection target of Rs 2050 billion during the current fiscal year and we hoped that target will be achieved," said Riffat Shaheen, official spokesperson of the FBR while talking to The Nation on Wednesday.
The FBR has revised the revenue collection target several times during the current fiscal year. The FBR had envisaged a tax target of Rs2.381 trillion for the budget 2012-13, which was slashed down to Rs2.193tr later.
The target was later revised to Rs2.050 trillion for the outgoing fiscal year. However, sources said that at the present growth rate, the revenue collection would stand at Rs1,990 billion by June 30 leaving shortfall at Rs 60 billion.
Meanwhile, the FBR in its latest Quarterly Review noted that Pakistan economy has been going through its difficult and tough times for few years. Major challenges faced by economy were power outages, low growth, falling investment, huge fiscal deficits, inflation, unprecedented floods and law & order situation. Amid these challenges govt tax revenues could not grow adequately in current fiscal year, particularly because imports did not show a healthy growth. The double-digit growth pattern in tax revenues maintained during last 10 years, therefore, could not be continued. The lower than expected revenue performance during first half of CFY reflects the impacts of persistent economic slowdown.
According to the FBR Quarterly Review, Pakistan economy is passing through a challenging phenomenon. On one hand, energy crisis, low imports and lesser demand have impacted the economy badly and on the other side, worsening law and order situation has posed severe threat to the growth momentum as well as investment.
In these difficult times, the economy has shown some sign of improvement like decline in inflation, increase in remittances and also marginal improvement in Large Scale Manufacturing (LSM). Since resource mobilisation is linked with the performance of macroeconomic indicators, therefore, the revenue collection process has also been adversely affected. However, FBR has devised a strategy to broaden the tax base by enhancing the tax net. Effective audit and enforcement together with automation are the key indicators for greater resource mobilisation.
The compensation of the deficit of revenue occurred in first half of ongoing fiscal year would need extra ordinary efforts by the field formations.
The Quarterly Review October to December 2012 stated that it is encouraging that FBR, despite persistent economic slowdown has been able to collect Rs 889 billion during July-December 2012-13 as compared to Rs 841 billion collected in the corresponding period last year. Thus, an additional amount of Rs. 48 billion has been added over the net collection of last year. The FBR missed the first half (July-December) target of Rs 958.3 billion by Rs 69 billion. However, more concerted efforts would be required to meet the revenue target. FBR revenue target for the FY: 2012-13 was fixed at Rs. 2,381 billion at the time of announcement of Federal Budget. Keeping in view unfavorable condition of the economy, the target has been revised to Rs 2,193 billion. FBR has collected Rs 889 billion net revenue during July-December 2012-13, despite unfavorable macroeconomic situation and power & gas outages. The collection has registered a growth of around 6pc over the collection of corresponding period last year.
According to the report, the collection under direct taxes has been Rs 337.5 billion, which is higher by 8pc as compared to the corresponding period of last year. Similarly, an amount of Rs. 381 billion has been collected from sales tax during July-December, 2012-13 indicating a growth of just 2.9pc over the collection of Rs 392.2 billion in the comparable period of last year. As far as customs is concerned, an amount of Rs 107.4 billion has been collected during the first six months of CFY as against the target of Rs. 111.1 billion. The collection under the head of Federal Excise Duty (FED) has been Rs 51.9 billion during the first six months of FY 2012-13 against the target of Rs.49.7 billion fixed for the same period.
Reasons for lower growth in collection have been recession in the economy, impact of energy crisis on manufacturing sector, slump in dutiable and taxable imports.