July-March FY18: Govt’s tax collection falls Rs129b short of target

[SunilM]

July-March FY18: Govt’s tax collection falls Rs129b short of target

ISLAMABAD:

The shortfall in tax revenues widened to Rs129 billion as the Federal Board of Revenue (FBR) collected Rs2.621 trillion in first nine months of the current fiscal year despite blocking tax refunds and taking advances from companies.


Provisional net revenue receipts of Rs2.621 trillion from July through March fell short of the nine-month target of roughly Rs2.750 trillion, according to FBR officials.

The collection, however, was Rs352 billion or 15.5% higher than the revenues received in the same period of previous fiscal year.

“The FBR during first nine months of the current financial year has recorded provisional net revenue collection of over Rs2.621 trillion against the Rs2.260 trillion collected during the same period of previous fiscal year,” said an official statement of the FBR.

It added that the figure did not include collections on account of book adjustment.

The FBR’s statement put last year’s collection at Rs2.260 trillion, but the State Bank of Pakistan’s data estimated it at Rs2.269 trillion. The FBR needs to achieve 19.15% growth in tax receipts to meet the annual target of Rs4.013 trillion.

It is trailing at a time when the Prime Minister’s Office and the General Headquarters alike are worried about the state of affairs in the FBR. The FBR has not been able to broaden the tax base.

In order to hide its performance, the FBR’s top brass has blocked the flow of information about actual tax collection to some of its members. The FBR’s annual book and Director of Research and Statistics Books are not being published this year to keep the information secret.

Its monthly collection was even worse. Tax authorities collected Rs361 billion in March, which was only Rs14 billion or 4% higher than the same month of previous year. The monthly collection was short of the Rs391 billion target by Rs30 billion. The tax collection has dropped below the 19% required rate of growth for the third consecutive month despite imposition of 25.5% sales tax on high-speed diesel, far higher than the standard 17% sales tax.

Heavy regulatory duties on essential and non-essential goods and 10% depreciation of the rupee are not even sufficient to achieve the tax target.

The latest figures have dashed hopes of achieving the annual tax collection and fiscal deficit targets. The Rs2.621-trillion collection in the first nine months constituted 65.2% of the annual target. The FBR was required to achieve at least 68.5% of the annual target in the period.

Government’s non-tax revenues are also falling short of the target, which will make it impossible to achieve the budget deficit goal of 4.1% of gross domestic product (GDP).

The International Monetary Fund (IMF) has projected that the deficit could widen to 5.5% of GDP. However, its assumption was based on the annual tax collection of Rs3.958 trillion.

Results for the first nine months indicate that tax collection will even fall below the IMF’s expectations.

Discussions had taken place between the Ministry of Finance and the FBR to lower the annual tax collection target, said sources in the FBR. However, this will be done on the premise of paying sales tax refunds, which the FBR has been withholding for the past many years to inflate the revenue collection figures.

According to some estimates, the FBR has so far withheld Rs350 billion worth of tax refunds. However, it officially acknowledges only Rs128 billion in sales tax refunds. The FBR has also taken huge advances from big corporations to get closer to the nine-month target, sources said.

A senior FBR official confided that in certain cases, the FBR had taken advance income tax for the July-September quarter of next fiscal year 2018-19.

The FBR is also struggling to improve the narrow tax base as despite numerous extensions, the number of income tax return filers stood at 1.260 million by March 1.

The number of return filers from all main sectors of the economy has actually shrunk in the past five years and it is only the salaried class that is providing face saving for the government.

Published in The Express Tribune, April 1st, 2018.

https://tribune.com.pk/story/167440...vts-tax-collection-falls-rs129b-short-target/

 

[volatile]

July-March FY18: Govt’s tax collection falls Rs129b short of target

ISLAMABAD:

The shortfall in tax revenues widened to Rs129 billion as the Federal Board of Revenue (FBR) collected Rs2.621 trillion in first nine months of the current fiscal year despite blocking tax refunds and taking advances from companies.


Provisional net revenue receipts of Rs2.621 trillion from July through March fell short of the nine-month target of roughly Rs2.750 trillion, according to FBR officials.

The collection, however, was Rs352 billion or 15.5% higher than the revenues received in the same period of previous fiscal year.

“The FBR during first nine months of the current financial year has recorded provisional net revenue collection of over Rs2.621 trillion against the Rs2.260 trillion collected during the same period of previous fiscal year,” said an official statement of the FBR.

It added that the figure did not include collections on account of book adjustment.

The FBR’s statement put last year’s collection at Rs2.260 trillion, but the State Bank of Pakistan’s data estimated it at Rs2.269 trillion. The FBR needs to achieve 19.15% growth in tax receipts to meet the annual target of Rs4.013 trillion.

It is trailing at a time when the Prime Minister’s Office and the General Headquarters alike are worried about the state of affairs in the FBR. The FBR has not been able to broaden the tax base.

In order to hide its performance, the FBR’s top brass has blocked the flow of information about actual tax collection to some of its members. The FBR’s annual book and Director of Research and Statistics Books are not being published this year to keep the information secret.

Its monthly collection was even worse. Tax authorities collected Rs361 billion in March, which was only Rs14 billion or 4% higher than the same month of previous year. The monthly collection was short of the Rs391 billion target by Rs30 billion. The tax collection has dropped below the 19% required rate of growth for the third consecutive month despite imposition of 25.5% sales tax on high-speed diesel, far higher than the standard 17% sales tax.

Heavy regulatory duties on essential and non-essential goods and 10% depreciation of the rupee are not even sufficient to achieve the tax target.

The latest figures have dashed hopes of achieving the annual tax collection and fiscal deficit targets. The Rs2.621-trillion collection in the first nine months constituted 65.2% of the annual target. The FBR was required to achieve at least 68.5% of the annual target in the period.

Government’s non-tax revenues are also falling short of the target, which will make it impossible to achieve the budget deficit goal of 4.1% of gross domestic product (GDP).

The International Monetary Fund (IMF) has projected that the deficit could widen to 5.5% of GDP. However, its assumption was based on the annual tax collection of Rs3.958 trillion.

Results for the first nine months indicate that tax collection will even fall below the IMF’s expectations.

Discussions had taken place between the Ministry of Finance and the FBR to lower the annual tax collection target, said sources in the FBR. However, this will be done on the premise of paying sales tax refunds, which the FBR has been withholding for the past many years to inflate the revenue collection figures.

According to some estimates, the FBR has so far withheld Rs350 billion worth of tax refunds. However, it officially acknowledges only Rs128 billion in sales tax refunds. The FBR has also taken huge advances from big corporations to get closer to the nine-month target, sources said.

A senior FBR official confided that in certain cases, the FBR had taken advance income tax for the July-September quarter of next fiscal year 2018-19.

The FBR is also struggling to improve the narrow tax base as despite numerous extensions, the number of income tax return filers stood at 1.260 million by March 1.

The number of return filers from all main sectors of the economy has actually shrunk in the past five years and it is only the salaried class that is providing face saving for the government.

Published in The Express Tribune, April 1st, 2018.

https://tribune.com.pk/story/167440...vts-tax-collection-falls-rs129b-short-target/

Its a small issue the big picture looks promising the problem with financial journalism

 

[SunilM]

Well the 'BIG PICTURE' is as when you take the Internal/External debt into account.

So you see, its not quiet kept pace at at all with the increase in the Internal/external debt.

 

[volatile]

Well the 'BIG PICTURE' is as when you take the Internal/External debt into account.

So you see, its not quiet kept pace at at all with the increase in the Internal/external debt.

You are missing the point Debt to GDP is fine

 

[Arbiter]

You are missing the point Debt to GDP is fine

 

[protest]

You are missing the point Debt to GDP is fine

Nope. There is a difference. Most of your external debt is soverien debt about 80% of it. Also about 30% of it is short term debt which is relatively quite high. Hence the reports of your need to pay over 35 billion in a years time. And over 80% of your external debt is dollar dominated debt and taken at commercial terms.

In India's case, only 20% of external debt is sovereign guaranteed. About 14% is short term debt which is on par with global standards. About 40% of india's external debt is taken through rupee bonds and dollar bonds are taken at very leisure interest rates. 80% of our external debt is taken by indian corporations who raise their debt at very low interest rates given their credit rating is quite better than your country Pakistan.

So all in all, its the composition of Pakistan's external debt that is worrying.

 

[SunilM]

You are missing the point Debt to GDP is fine

No it is not. Dar changed the Definition of 'Debt' two times to fudge the figures. Do your research on the subject and why it was done. Also all CPEC loans are not covered under the term 'Debt' thanks to Dars change of Definition. I will leave you with a link, but there is a lot more to be said on the subject. Do your own research and enlighten yourself.


Dar’s legacy: a heavily-indebted Pakistan


ISLAMABAD:

Pakistan’s total debt and liabilities swelled to an alarming level of Rs25.1 trillion by June this year – with a net increase of Rs2.5 trillion in a year, exposing the country to many risks attached with repayment of mounting obligations.


While some quarters still insist that Ishaq Dar’s performance as finance minister during the last four years is up to the mark, the ground reality is quite the opposite.


The shocking elements were that the country’s total external debt and liabilities increased to roughly $83 billion by end of fiscal year 2016-17 and a sum of $8.2 billion was spent on its servicing.

In terms of the total size of the economy, the country’s debt and liabilities increased to 78.7% of the gross domestic product (GDP), which is way above the safe level for a developing country like Pakistan, according to the data released by the State Bank of Pakistan on Thursday.

Finance czar: Double whammy for Ishaq Dar

Every Pakistani now owes Rs120,381 as against roughly Rs91,000 in 2013, which reflects an increase of 32% over more than four years.

By all means, Pakistan’s total debt and liabilities have crossed the dangerous mark, suggesting the country has fallen into a debt trap. The growth in total debt and liabilities was 11% last year – the second consecutive year when the country saw a double-digit growth.

“Things are not bad as we thought, they have actually gone worse,” said Asad Umar, member of the National Assembly from the Pakistan Tehreek-e-Insaf (PTI).

As against the Rs22.57 trillion of FY 2015-16, Pakistan’s total debt and liabilities increased to Rs25.1 trillion by June 30 of this year, showing an 11% growth over the previous year, said the SBP.

The total debt includes the obligations of both the government and the private sector, although the private sector debt is minimal as compared to that of the government.

Finance czar may be on his way out

Excluding liabilities, the total debt grew to Rs24 trillion by the end of last fiscal year – a whopping 75.3% of GDP and a net increase of Rs2.43 trillion from the previous financial year.

Out of Rs25.1 trillion, the gross public debt, which is the responsibility of the government directly or indirectly, was Rs21.4 trillion, according to the SBP data. The gross public debt increased by Rs1.732 trillion or 8.8% in the last fiscal year.

In order to conceal the worsening debt picture, the federal government twice revised the definition of public debt. According to the finance ministry’s definition, the public debt was Rs19.64 trillion, but the PTI has already decided to challenge the amended definition in the Supreme Court.

The gross public debt of Rs21.4 trillion was equal to 67.2% of GDP, which was in violation of the original limit set under the Fiscal Responsibility and Debt Limitation Act, passed by parliament in 2005.

External debt

The external debt grew to Rs8.33 trillion. There was an addition of Rs960.3 billion in a single year on the back of 13% growth, according to the central bank. The government claims its external debt is Rs5.9 trillion, although it raises serious questions over the government’s definition of debt calculation.

In terms of the US dollar, the total external debt and liabilities have increased to $82.981 billion – a net addition of $9.1 billion in a single year. The increase in external debt is more than the International Monetary Fund (IMF) estimates that had put the figure at $79.1 billion in its last report.

Pakistan is now sitting on explosive mines, as the day it would let the rupee gain its actual value against the US dollar, the country’s external debt would phenomenally grow. The country spent $8.2 billion on repayment of external debt and interest on it during the last fiscal year, according to the SBP. The external debt servicing increased by another $2.8 billion or a whopping 53.4%.

Proposal to allow rupee depreciation opposed by Dar

The public external debt servicing stood at $6.5 billion – higher by $2.1 billion or 47.4%. The principal loans repayment by the public sector stood at $5.2 billion – up by 59.5% in a single year, thanks to reckless borrowings by the finance ministry.

The external debt as percentage of last year’s exports was alarmingly 382% – many times more than the safe limit of 175%.

Domestic debt

The government’s domestic debt also swelled to Rs14.9 trillion – higher by Rs1.24 trillion or 9% over the previous year’s level. The debt of public-sector enterprises grew at an alarming pace of 44.7% and was registered at Rs822.8 billion.

Pakistan has been borrowing heavily to meet budget demands as it remains unable to broaden its extremely narrow tax base. The government, however, instead of improving its affairs got the definition of public debt changed.

During the past three years, the PML-N government has been subject to severe criticism for acquiring expensive foreign debts, increasing the debt mountain.

https://tribune.com.pk/story/1512968/dars-legacy-heavily-indebted-pakistan/

 

[volatile]

No it is not. Dar changed the Definition of 'Debt' two times to fudge the figures. Do your research on the subject and why it was done. Also all CPEC loans are not covered under the term 'Debt' thanks to Dars change of Definition. I will leave you with a link, but there is a lot more to be said on the subject. Do your own research and enlighten yourself.

When you say fudge you are pointing fingers at SBP of Pakistan be careful SBP has issues no such statements ,how ever Modi was angry when Indian Credit rating was downgraded last year

Nope. There is a difference. Most of your external debt is soverien debt about 80% of it. Also about 30% of it is short term debt which is relatively quite high. Hence the reports of your need to pay over 35 billion in a years time. And over 80% of your external debt is dollar dominated debt and taken at commercial terms.

In India's case, only 20% of external debt is sovereign guaranteed. About 14% is short term debt which is on par with global standards. About 40% of india's external debt is taken through rupee bonds and dollar bonds are taken at very leisure interest rates. 80% of our external debt is taken by indian corporations who raise their debt at very low interest rates given their credit rating is quite better than your country Pakistan.

So all in all, its the composition of Pakistan's external debt that is worrying.

We will survive as always dont worry ,thanks for pointing out deficiencies in our system also Currently i have no interest in Indian comparison with FDI inflated figures

 

[Viking 63]

we need something different than FBR who can bring some radical changes to our Tax system, it is not working even Hillary Clinton spoke once about Pakistan's pathetic Tax system.