Inefficient: FBR chief admits govt withholding Rs97b refunds

ISLAMABAD: The top taxman of the country admitted on Wednesday that the government was withholding Rs97 billion refunds of taxpayers – an amount if extracted from latest collection brings actual growth in revenues to a level that is even below the nominal rate of national output. “The total payable refunds to taxpayers as of today are Rs97 billion,” said Federal Board of Revenue (FBR) Chairman Tariq Bajwa, who has been struggling to achieve even the downward revised annual collection target of Rs2.345 trillion. For the current fiscal year 2013-14, the Parliament’s approved target is Rs2.475 trillion. It was for the first time that any government official admitted that the FBR owed such a big amount to taxpayers, vindicating the business community and economists who were crying foul about the FBR’s claim of achieving over 16% growth in revenue collection. Bajwa was speaking at the platform of the Senate Standing Committee on Finance and Revenue. However, Bajwa maintained that the amount the government owed to taxpayers was less than the comparative period when the outstanding refunds stood at Rs99 billion. As of April 22, the FBR has collected Rs1.671 trillion in taxes – claiming that it was higher by Rs222 billion or 15.3% over the collection made in the comparative period of the previous fiscal year. By extracting the amount payable to taxpayers, the actual collection comes to Rs1.574 trillion, higher by just Rs125 billion or 8.6% over the previous year. The 8.6% growth in collection is far below the nominal Gross Domestic Product (GDP) growth rate. The nominal GDP is determined by calculating inflation plus GDP growth rate. During the first nine months of this fiscal year the inflation rate was 8.6% while the official average growth rate in the first six months (July-December) was 4.1%, bringing the nominal GDP rate to 12.7%. According to leading tax experts, any growth in collection below the nominal GDP rate indicates evasion in taxes, highlighting inefficiency of the FBR. Bajwa did not disclose the actual refund claims, despite repeatedly being asked by Senator Ilyas Bilour of ANP. The other day Bilour had claimed that the FBR has blocked Rs450 billion refunds – a claim which went uncontested despite FBR’s chief sales tax being present in the meeting. Bajwa said till April 22, the FBR has paid Rs87.3 billion in refunds to taxpayers, higher by Rs10.8 billion or 14% over the amount paid in refunds in the comparative period. He claimed that the FBR has developed a robust system of refund payments and even his relatives are not paid refunds before their turns. However, the committee contested the chairman’s claim and said that most of the time the FBR’s systems were not properly working in a deliberate attempt to delay refund payments. Published in The Express Tribune, April 24th, 2014.