ISLAMABAD: The Federal Board of Revenue (FBR) has estimated a revenue loss of over Rs300 billion during the April-June quarter of the current fiscal owing to a slowdown in economic activities because of a coronavirus threat.
At a time when the government is struggling to contain the spread of the virus, top FBR officials are reviewing the impact of coronavirus on various sectors as well as on revenue collection, Dawn has learnt from knowledgeable sources.
“So far the performance of revenue is good in March,” an official said. However, in case of lockdown or shutdown of business activities, the revenue impact would be much higher, the official said.
Elaborating, the official said the petroleum sector, which is one of the major revenue spinners, had seen more than 20 per cent reduction in its consumption. The inter-city transport has almost come to a standstill, besides drastic cut in buying of luxury goods that attract higher taxes.
Top tax officials reviewing impact of coronavirus on various sectors, revenue collection
The FBR fears that multinational and other big companies may also reduce their operations which will lead to a bigger shortfall in revenue collection. “We are watching all these developments closely,” the source said.
In the first eight months, the FBR has already missed the tax collection target of the current financial year by a whopping Rs484 billion. It has collected Rs2.725 trillion during this period against the target of Rs3.209tr.
The figures, however, show a growth of 16.35 per cent, compared to Rs2.342tr collected during the same period last financial year.
An FBR source told Dawn that acting chairperson Nausheen Amjad had given a preliminary presentation to Adviser to the Prime Minister on Finance and Revenue Dr Hafeez Shaikh on the performance of various sectors since the outbreak of coronavirus in Pakistan. She will share sectors-wise data with the adviser to assess the impact of the virus on these sectors.
Prime Minister Imran Khan has asked the finance ministry and the FBR to identify the sectors which need special supports.
“The support will be in the shape of reduction in taxes for those sectors or a financial package,” the source said, adding that a final decision on the package would be taken by the prime minister.
According to another source, the FBR is also preparing a report for the International Monetary Fund (IMF) to appraise it of a possible impact of coronavirus on revenue collection in the last four months of the current fiscal year. “We will shortly finalise our assessment report for submission to the IMF,” the source said.
In the last meeting with the IMF, it was conveyed that the FBR would not be able to reach even close to the revised target of Rs5.270tr. It was estimated that revenue collection would remain at around Rs4.8tr as against last year’s Rs3.85tr. The FBR now believes that collection will be even much lower than the initial estimate of Rs3.7tr already shared with the IMF.
The IMF has already lowered the revenue collection target to Rs5.270tr from the budgetary projection of Rs5.503tr.
Appointment of FBR chairman
Since January this year, tax issues are being handled on a day-to-day basis which leads to a consistent decline in revenue collection. FBR chairman Shabbar Zaidi is on indefinite leave and the government has given charge to member administration Nausheen Amjad.
A well-placed source told Dawn that Mr Zaidi was shifting his household items to Karachi in the next couple of days. This indicates that he is not going to resume his office, the source said, adding that Mr Zaidi is also not taking interest in FBR’s affairs anymore.
The coronavirus fear has also minimised the chances of Mr Zaidi resuming his office, the source said, adding that the FBR chief was expected to submit his resignation.
Mr Zaidi could not be contacted for his comment on the matter.
According to the source, Hafeez Shaikh is waiting for Mr Zaidi’s resignation and avoiding sacking him because he is very close to the prime minister.
The adviser will appoint a regular chairperson of the FBR the moment Mr Zaidi submits his resignation.
FBR high-ups believe that the delay in appointment of a regular chairperson and other officers at top positions has caused uncertainty within the tax department, leading to revenue bleeding on a daily basis.
It is also worth mentioning that the government has almost finalised the appointment of Haroon Akhtar Khan as Special Assistant to the Prime Minister on Revenue. However, a notification about the appointment was delayed because of resistance from some cabinet members.
Moreover, it is believed that Dr Shaikh has also managed some crucial issues with the IMF officials as part of the package to reduce burden on the masses. As a result, now the government will not increase gas and electricity tariffs which were a major demand of the IMF.
According to the source, Dr Shaikh regained confidence of the prime minister over these developments, otherwise the latter wanted changes in his economic team because of sheer criticism from the opposition.