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FBR on right track

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AFTER a long long time, the Federal Board of Revenue (FBR) seems to have adopted a workable strategy to boost revenue collection substantially without burdening the existing honest taxpayers. Chairing a high-level meeting in Islamabad on Tuesday, Caretaker Minister for Finance Dr Shamshad Akhtar asked the officials about FBR’s strategy to plug the widening gap for materializing the fixed annual target of Rs9.4 trillion. The Board informed that it was working to plug loopholes in five major areas in order to fill the expected revenue shortfall in coming months.

In the first place, there was no genuine reason for missing the ambitious revenue collection target as duties and taxes have automatically increased in a big way because of record price-hike of goods and services. The Government gets more taxes with every increase in the prices of petroleum products and a hike in electricity tariff besides contraction in the size of the subsidies that provides fiscal space to the authorities concerned. However, it is encouraging that the Board, instead of imposing new taxes or increasing the rates of the existing ones, is now focusing on curbing corruption and illegal practices to shore up its revenues. It is intriguing why this aspect remained unattended when the country was suffering a loss of Rs 140 to 150 billion on account of withholding tax alone as withholding agents collect withholding tax but do not deposit it in the treasury. This is in addition to huge amounts of sales tax collected by businesses but never deposited in the national kitty because of weak enforcement. Similarly, it is estimated that the revenue collection can increase by Rs. 50 billion if effective measures are introduced to check tax evasion in the tobacco sector, where the track and trace system is not fully operational despite tall claims made for quite some time. The loss of tax collection on account of rampant smuggling can be gauged by the fact that goods worth $02 to 03 billion are smuggled through Pak-Afghan and Pak-Iran borders besides menacing dimensions of smuggling taking place through Pakistan-India border, LoC and seaports/airports with full connivance of the tax officials. Under-invoicing is another area that can help check tax evasion and bilateral talks should be held with all significant trade partners to exchange real import/export figures that would help improve the valuation process.

 

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