IMF rejects FBR’s plea to slash revenue collection target

ISLAMABAD: The FBR Chairman, Shabbar Zaidi, said on Monday that the IMF did not accept our request for slashing down the FBR's annual target of Rs5.5 trillion but efforts would continue for convincing the Fund team to this effect.

In the first review talks concluded on November 8, 2019, the IMF had refused to change the macroeconomic targets except slightly bringing down the inflationary projections. When asked about slashing down the FBR target in the Parliament House, Shabbar Zaidi replied that the FBR requested to reduce the target but the IMF did not accept it for the time being. “We will continue efforts to convince the IMF for slashing it down,” he added.

Pakistan and the IMF had worked out projections on the basis of assumptions thatthe FBR could collect a maximum of Rs 5,270 billion keeping in view the import compression against initially envisaged target of Rs5,503 billion for the current fiscal year. So a revision of target by Rs 233 billion was discussed by the two sides. However, at the final round of talks, the IMF refused to accept reducing the FBR revenue collection target. Some independent economists are projecting that the FBR could collect maximum Rs 4,400 to Rs 4,500 billion in the current fiscal year. To another query regarding FBR’s restructuring plan, Zaidi said the government has not backed out from the FBR’s restructuring plan and only its timelines were changed.

Earlier, a meeting of the Senate Standing Committee on Finance, Revenue and Economic Affairs was held on Monday, at Parliament House. Chaired by Senator Farooq Hamid Naek, the committee took up smuggling of LED TVs referred by Senate chairman and it was informed that the countrywide enforcement operations against smuggling of goods including LED TVs has recorded an increase of 40 percent during FY 2018-19 in comparison to previous financial years.

Discussing details of the increase in number of tax payers in the current financial year the Committee was informed that a 65.2 percent increase was observed vis-a-vis the corresponding period of last year. The committee was also informed that out of 2,655,081 return filers, 888,748 new tax payers were added. The number of individuals who availed Asset Declaration Ordinance 2019 was 124,208. Tax payers of Rs 4.7 billion under the present scheme was also observed. The main challenge faced by the agency was a ban on recruitment which has now been removed.

The Committee stressed the need for training of Coast Guards and Frontier Corps who have been granted anti-smuggling powers. Reviewing whether increases in the taxes and duties have contributed to a rise in smuggling of goods, the committee was informed that there is zero tax on raw material. This was done specifically to encourage industrialisation. The senate panel encouraged formulation of legislation for this purpose.

Deliberating over steps taken to get Pakistan out of the FATF Grey List, the committee was informed that Pakistan is committed to align the country with global financial system and position Pakistan as a reliable partner in countering global ML/TF challenges. Towards this end Pakistan has formalised Internal Action Plan to revamp legal regulatory and supervising framework. It was asserted that legislative revamp in banking and financial systems, institutional reorganisation and capacity building, addressing enforcement e-governance and financial challenges, autonomy of regulatory framework and regimes while ensuring permanency of newly raised structures. In addition to this, Pakistan seeks to revamp the entire AML/CFT Regime. According to FATF assessment Pakistan has largely addressed five out of 27 action items.

Detailing revenue collected during the financial year 2019-20 as against a target of Rs5.5 trillion, the committee was informed that FBR has collected Rs1,280 billion against a target of Rs1,447 billion which is 16.3 percent higher than the previous year.