CHAIRMAN Federal Board of Revenue (FBR) Shabbar Zaidi has informed the Senate Standing Committee on Finance that revision in tax collection target of Rs 5.5 trillion for the current fiscal year is under consideration and the figure would be shared with the Committee. In a briefing, he told the Committee that there is a shortfall of Rs 200 billion in tax collection during the five months of the current fiscal year which is attributable to over $4 billion import compression, adding that tax collected on imports constitutes to 50% of tax collection.
There is no doubt that the incumbent Chairman of the FBR has been making strenuous efforts to expand the tax base and increase tax collection and most of the measures initiated by him have started bearing fruit. There was over 17% increase in tax collection during first quarter of the current financial year as against collections made during the comparable period last year. However, meeting the target requires 44% growth in collection, which seems to be unrealistic in present circumstances and the state of the economy. It was because of this that the FBR and the IMF agreed to bring down the target for the year to 5.27 trillion rupees but experts believe it would still be impossible to realize it. The Chairman and his team are trying their best to tackle with the challenge of increasing tax collection but they obviously handicapped by political compulsions of the Government, which compromised on its avowed comments and entered into a much watered down agreement with traders. As pointed out by Shabbar Zaidi wholesalers and retailers contribute 18% to the Gross Domestic Product but contribute only three per cent in taxes. If an even-handed policy is adopted to make the businessmen pay their due taxes then there would be no need to burden all those who are already paying their taxes honestly. One would also agree with the Chairman that the Government was not in a position to give any exemption owing to fiscal constraints and also because these create distortions in the system but the policy of favouritism towards traders negates this claim. Incentives to industry and businesses are always welcome as these help stimulate the economic growth but there should be no compromise on tax liabilities.
