Daily Times

Right from the word go, this current government prioritised doubling revenue collection. Of course, this singular focus put the Federal Board of Revenue (FBR) under the spotlight. This triggered a trial by media, enormous public censure as well as undue criticism by those who know very little about the multitude of internal and external challenges that the Board faces.

The desire to accomplish too much in too short a time overlooked the need for a concrete action plan. Thus, many experiments were made and some experts were tested. But things failed sooner than expected and word-wizards looked the other way as the chips went down.

Revenue collection has always been one of the most loathed jobs in the world. And here, in Pakistan, it is no exception. Not least because of the country’s porous borders, highly informal economy, largely undocumented business which is historically under a massive elite capture and ongoing tax compliance challenges.

Professional organisations can only perform at peak level when run by hardcore professionals from within their own cadre and who know the industry inside out; preferably having held positions at both the policy and operational level. The government therefore rightly changed its course. It not only left the trusted senior management in place but appointed senior FBR officers to key positions including the team leader: Chairman FBR.

As Pakistan groans under the loan burden, both domestic and foreign, the need for the FBR to broaden its tax base and collect maximum revenue shall keep growing. Likewise, the Board will face mounting pressure to not only maintain its performance but also to raise the bar

The results were almost immediate. For the first time in Pakistan’s history, the FBR has collected revenues worth more than four trillion rupees, with a month still left to spare out of the yearly target. It has not only achieved its assigned targets but exceeded them by Rs176 billion in eleven months of the current fiscal year. According to provisional figures, FBR has collected net revenue of Rs4.170 trillion during July-May period, exceeding the target of Rs3,994 billion by a clear margin of Rs176 billion. This registers a growth of about 18 percent over the collection of Rs3,549 billion during the same period last year. The government in consultation with the IMF (International Monetary Fund) revised tax collection, downgrading the target to Rs4.69 trillion from Rs4.96 trillion. The FBR would have to collect Rs527 billion in last month (June) to achieve this. It is pertinent to mention here that the government restricted the budget deficit in first nine months (July-March) of FY2021-22, mainly due to improved tax collection. The country’s expenditures stood at Rs.6.64 trillion as against revenues of Rs4.99 trillion leaving budget deficit at Rs1.65 trillion or 3.6 per cent of GDP. The net collection for the month of May was Rs.386 billion, against a required increase of Rs.214 billion, representing an increase of 69 per cent over Rs.229 billion collected in May 2020 and 168 percent of the target.

Living up to its commitments to the business community, the FBR continued to issue refunds through a transparent centralised system and it disbursed Rs.216 billion compared to Rs.125 billion paid last year, showing an increase of 42.3 per cent. This is reflective of the FBR’s resolve to fast-track refunds and thus provide the much needed liquidity support to the industry. This improved revenue performance is also a vivid manifestation of growing economic activity in the country despite the challenge of the third wave of the pandemic. While the FBR’s efforts to broaden the tax base are also gaining momentum, signs are obvious that these endeavours are bringing the desired results. As of May 31, 2021, income tax returns for the last tax year ( 2020 ) reached 2.93 million compared to 2.63 million in tax year 2019, showing an increase of 11.4 percent. The tax deposited with returns was Rs.52 billion compared to only Rs.34 billion last year, showing an increase of 55 per cent. The FBR has also released updates regarding Tier-I retailers being integrated into with POS (Point of Sale) system. The Board found that 10,767 sales points have been integrated with POS Linked Invoicing System.

Elsewhere, Pakistan Customs collected Rs672 billion in customs duties in the first eleven months of FY 2020-21 against the assigned target of Rs.565 billion, exceeding this by Rs107 billion or 19 percent. In addition, in May 2021, Rs.64 billion was collected in customs duties against the monthly target of Rs.57 billion, which is again 12 percent above the monthly target. In May 2021, smuggled goods worth Rs2.6 billion were seized, compared to the same month the previous year when smuggled goods worth Rs1.5 billion were seized, thereby recording an increase of 74 percent. Similarly, during the last 11 months (July 2020- May 2021) of the current financial year, smuggled goods worth Rs52.5 billion were seized as compared to Rs40.8 billion in July 2019-May 2020 of the last financial year, thus showing an increase of 29 percent. Thus, enforcement measures, effective administration such as auctioning goods, control measures against under-invoicing, adjudication of court cases, recovery of arrears, and audits have also contributed significantly to revenue generation.

As the country groans under the heavy burden of huge loans, both domestic and foreign, the need for the FBR to broaden its tax base and collect maximum revenue shall keep growing. Likewise, the Board will face mounting pressure to not only maintain its performance but also to raise the bar. While it is heartening to see Prime Minster Imran Khan tweeting regularly to laud the FBR — as the single largest organisation mandated to collect revenues — it remains important to financially incentivise the Board in amounts at least equivalent to the executive allowance being drawn by PAS (Pakistan Administrative Services) or PMS (Provincial Management Service) or the special allowance sanctioned for NAB, FIA, Senate and National Assembly, if not more.

The writer is a civil servant by profession, a writer by choice and a motivational speaker by passion!