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PIAF Flays FBR For Negative Growth in Tax Collection

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LAHORE– The Pakistan Industrial & Traders Associations Front (PIAF) has flayed the Federal Board of Revenue for its poor performance in revenue mobilization, as it has registered the negative growth in tax collection in FY19, first time during the past half century.

Quoting the statistics of the FBR’s annual report, PIAF Chairman Mian Nauman Kabir said that the tax agency collected Rs3.83 trillion during the FY19 and failed to even reach the preceding fiscal year target of Rs3.85 trillion. Last time, the negative growth of tax collection was recorded in fiscal year 1967-68.

He said the FBR missed the revised target of Rs4.15 trillion and collected only Rs3.838 trillion, facing Rs607 billion shortfall against actual revenue collection target of Rs4.44 trillion during the fiscal year of 2018-19.

Mian Nauman urged the government to set realistic tax target that could be achievable and prove beneficial for the economy. He said that on the insistence of the IMF, the federal government had set the FBR’s tax collection target at Rs5.5 trillion or 12.4% of gross domestic product (GDP), requiring an impossible growth of 44% over previous year’s collection.

He said that forcing the existing taxpayers to meet unrealistic target will result in widespread resentment among the business community which should be reconsidered.

He said that the wrong policies of the government have reduced imports by $10 billion which has also reduced revenue thus making the achievement of target impossible. Moreover, the revenue target cannot be achieved forcefully in this time of economic contraction, he said and added that a right policy is needed to trigger investment which is at the lowest ebb due to the fear among the investors.

PIAF chairman said the overall growth in net tax collection declined by Rs15.3 billion in FY2019 when compared with the collection of the preceding fiscal year.

He said the sales tax and direct taxes recorded negative growth of 1.8 percent and 5.9 percent, respectively though the collection of federal excise duty grew by 11 percent and custom duties by 12 percent during the last fiscal year.

In 2018-19, the share of customs duty and federal excise duty increased, whereas the share of direct taxes and sales tax decreased which is not good for general public.

According to the data, the last quarter of 2018-19 was the worst in terms of tax revenue collection. Though monthly growth trend indicated the increase in July 2018 to May 2019, but during the remaining ten months either growth was below the double digit or negative.

Negative growth in revenue collection was recorded during five months as compared to corresponding months of the previous year, which was in fact very unusual.

He said that the government has requested the International Monetary Fund (IMF) to reduce the federal tax target by Rs300 billion to Rs5.2 trillion as shortfall in collection has widened to Rs167 billion in just four months of the current fiscal year.

He urged the government to revise its new target of Rs.5.27 trillion, which is not achievable yet, asking the economic managers the revenue collection target should also be growth oriented.— PRESS RELEASE