Surprisingly, FBR showed some improvement in tax collection in July by collecting Rs.57 billion more than the set target. But, as usual, its performance remained sluggish in August and missed the target by Rs.18 billion. If it fails to fetch tax revenue of Rs.376 billion in the current month, then International Monetary Fund (IMF) will press for their traditional shock therapy of bringing the second minibudget in the first quarter of the current fiscal year, which has always been a baggage of regressive indirect taxes. First minibudget has come by way of increasing petroleum product prices. Despite almost stable prices of crude oil in the international market, prices petrol and diesel were increased by Rs.15. OGRA has sent a summary of increasing petroleum product prices by Rs.7 per liter, which has been temporarily put on hold.
Over the past 13 years, the ruling leadership, including the present one, has been forced by the FBR bureaucracy to beat an insulting retreat from its decision to reform the tax administration. The prevailing tax regime is highly regressive, unproductive and non-transparent. The honest taxpayers from all walks of life would gladly pay their due taxes if tax collectors show honesty and cumbersome tax regime is simplified. Majority of tax return files are from the salaried class. There is greater reliance for revenue mobalisation from direct taxes such as withholding tax on services, business and industry and advance incaome tax received from exporters and importers. The present tax regime is a major factor of stagnation and strangulation of economy in addition to low tax-GDP ratio.
The topnotch bureaucracy of the FBR has always been a stumbling block in the long overdue reforms of this organisation. In the present government, they first resisted the appointment of Shabbar Zaidi from private sector as Chairman FBR and later compelled him to opt for long leave as measure of gracefully quitting his job. The incumbent government wanted to bring structural reforms in the FBR to convert it into an efficient Tax Authority. The move was defeated. Hence the outmoded and obsolete tax collection machinery cannot be restructured. Willingly or unwillingly, FBR has failed to carry out the documentation drive of large informal economy, which is essential for expanding the tax base of the economy, largely through direct taxes.
