The Federal Board of Revenue failed to meet its revenue collection target for March. By Rs 100 billion, taking the total shortfall to Rs 725 billion. It should be noted that the shortfall is in the revised target given by the IMF in its recent review, when it cut the annual target from Rs 12.97 trillion to Rs 12,33 trillion, a reduction of Rs 340 billion. The collection of Rs 8.44 trillion is up 28 percent year-on-year for the July-March period, but is still Rs 725 billion short of the revised target of 9.17 trillion. If the target had not been revised downwards, the shortfall would have already crossed Rs 1 trillion. As it is, that milestone will probably be achieved by the end of the fiscal year.
The FBR has already benefited from a windfall and adopted questionable methods, the resolution of certain cases had led to large inflows, as a result of the vacation of certain stay orders, the main questionable tactic has been to delay refunds of sales tax. This is a well-tried tactic, but it suffers from a number of defects. First, it encourages corruption, as taxmen ask for bribes before making the refunds. Second, it merely means kicking the can down the road, as the refunds ultimately have to be made, and thus depress the collection figures of that period. It seems that the C\FBR may have begun to rely on this accounting trick, as the refunds during March declined 52 percent at Rs 34 billion, thus causing the refunds for the first three quarters to reach Rs 384 billion, which was Rs 6 billion up year on year.
The pattern of the FBR promising the moon to the IMF when a package is sought, followed by more promises of the moon when targets are not met, is inherently unstable. The result has been that even the IMF seems to have fallen in with this way of doing business, and is ready to revise targets during the reviews of programmes. Indeed, one or the other, should insist on more realism, because no country likes a trillion-rupee-hole collection, let alone one that is close enough to default that it needs to go to the IMF.
