Lofty tax target: Waqar hints at taking additional steps

Secretary Ministry of Finance Dr Waqar Masood hinted on Wednesday that the government would take some additional measures to meet the ambitious revenue collection target of Rs 1,952 billion for 2011-12. During the meeting of the Senate Standing Committee on Finance held here on Wednesday.
Dr Waqar Masood also defended Federal Board of Revenue (FBR) Chairman Salman Siddiq, terming gross reporting of revenue collection figures for 2010-11 as error of judgement by the tax authorities. Giving statement on the issue of wrong reporting of figures for 2011-12 at the Senate Standing Committee on Finance, Dr Waqar Masood congratulated the FBR Chairman and his team of tax managers for showing remarkable performance by collecting Rs 1558 billion ie 98 percent of the original budgetary target.
The revenue collection target of Rs 1588 billion was very ambitious and challenging for the tax machinery. Under the dynamic leadership of Salman Siddiqui the FBR was able to successfully surpassed revenue collection target for 2011-12. It is a big achievement and the entire credit goes to FBR Chairman Salman Siddiqui.
The Secretary Finance stated that the budgetary target of Rs 1667 billion was set for 2010-11 on the assumption that major revenue collection would come from three policy measures including Reformed General Sales Tax (RGST), flood surcharge and proposed increase in the rate of special excise duty. However, there was no progress on this account and the government was unable to obtain approval of the RGST from the Parliament. Later the target was downward revised to Rs 1604 billion and further reduced to Rs 1558 billion during the period under review. If the taxation measures taken in March 2011 were taken at the time of budget (2010-11), the FBR had been able to meet the budgetary target of Rs 1667 billion for 2010-11.
Unfortunately, on June 30 2011, a situation was emerged due to which the FBR was unable to celebrate the remarkable achievement of the FBR. On June 30, 2011, the FBR had claimed to surpass the target of Rs 1558 billion for 2010-11 in a press conference. There is a constant change in the provisional figures and FBR Chairman announced what was presented before him as provisional figures. Even if the same figures had been presented before me, I had also announced the same figure. However, the FBR has called the press conference in a hurry and announced the provisional figures for 2010-2011, he stated.
Secretary Finance said that the FBR has taken precautionary measures to avoid such kind of revenue reporting in future. We have taken care of the reasons which caused such kind of situation in wrong revenue reporting of figures. We have rectified the errors in the revenue reporting system and now such situation would not emerge in future.
Dr Waqar Masood further said that later the authenticity of the claim became a question mark for the FBR. It came to the light that the figures were not reconciled with the State Bank of Pakistan (SBP) and there was a shortfall of Rs 30 billion in revenue collection figures for 2010-11. In view of shortfall in revenue collection, the baseline for revenue collection for 2011-12 has been changed and target of Rs 1952 billion needs to be adjusted. In this regard, the government would take some steps to meet the revenue collection target during current fiscal.
So far 26 percent growth in revenue collection is required for meeting target of Rs 1952 billion. However, the FBR revenue collection figure during first quarter (2011-12) has shown growth of 30 percent. Senator Safdar Abbasi was of the view that the FBR has clarified reports of obtaining advances and deposit of such amount in the far-flung areas where online revenue reporting system is not available.
The advances have been allegedly deposited in unknown stations where only manual facility of revenue deposit was available at the banks. Secondly, whether the FBR has fixed responsibility on the tax officials responsible for wrong reporting of figures? Thirdly, why the tax machinery was creating an impression that the target of Rs 1588 billion has to be achieved at any cost?
Senator Haroon Akhtar said that it is a major flaw in judgement of the FBR for announcing gross figures instead of net for 2010-11. How it is possible that the error in revenue reporting took place in the entire system and wherever the flaw lies it has to be rectified. Responding to a query, Secretary Finance admitted that someone in the FBR had deliberately fed wrong information to media at the time when the gross figures of revenue collection were announced by the FBR. The government can either focus on doing its day to day work or just clarify news items published in print media on regular basis.
Senator Ishaq Dar of PML (N) informed the committee that it is very unfortunate that incident like wrong reporting of revenue collection has taken place, which has created embarrassing situation for the government. However, the government has done the right thing by diagnosing the problem and appropriate steps have been taken to rectify the errors.