Tax shortfall reaches Rs606b

The tax shortfall has widened to Rs606 billion in just eight months of this fiscal year amid the government’s demoralising move to transfer a senior female officer for questioning late-evening orders to fix the national flag on a borrowed vehicle for the finance minister.

While the Federal Board of Revenue (FBR) sustained a colossal shortfall of Rs606 billion against the July-February target of Rs7.95 trillion, it also faced the difficult task of reassuring its visibly frustrated officers due to a highly questionable intervention by the finance minister’s staff.

The FBR provisionally pooled Rs7.342 trillion during the July-February period of this fiscal year, showing an impressive growth of around 28%. But it was not enough to hit the International Monetary Fund (IMF)-dictated target of Rs7.95 trillion. This caused a shortfall of Rs606 billion against the target, putting the authorities under pressure.

However, the unusual transfer instructions from the finance minister’s office may further complicate the situation within the tax machinery.

The Collector Customs Islamabad, a Grade-20 female officer, was unceremoniously removed on February 26 after she questioned the finance minister’s office’s irrelevant demand to fix the national flag on a borrowed vehicle at 8:30PM on Tuesday, according to Customs officers. Because of her integrity, she had been posted as Collector Customs around four months ago but was transferred for asking the right question to the finance minister’s staff.

It was also not the responsibility of the Collector Customs Islamabad to first provide a non-custom-paid vehicle to the finance minister for his travel to Peshawar and then fix a flag on it, multiple Customs officers told . The minister went to Peshawar on Wednesday on an official trip.

The unceremonious removal of a “very senior officer known for integrity, professionalism, and competence” triggered condemnation from the Officers Association of Pakistan Customs Service on Friday.

Sources said the Collector Customs received directives from the finance minister’s office to provide a luxury vehicle for the minister’s visit to Peshawar.

The finance minister, who comes from the private sector, has not been using a government vehicle since taking office. However, because of his office staff, Aurangzeb has been pitched against the Customs officers, who blame him for allowing undue intervention by his staff.

Sources said this was not an isolated incident of car requisition, as the finance minister’s office staff was also using non-duty-paid Customs vehicles.

They said the Customs Collectorate delivered a vehicle on Tuesday evening. The plan was that the finance minister would travel in his own vehicle while the borrowed vehicle would be used for his escort. However, later that evening, at around 8:30PM, she received orders from the finance minister’s office to fix the flag on the vehicle. Sources said the officer questioned the demand, which annoyed the finance minister’s office and resulted in her removal.

The staff complained to the minister, who then directed the removal of the Collector Customs, said sources.

Member Customs Junaid Jalil did not respond to a request for comments on the development.

“She was transferred because she had the audacity to tell one of the staffers at the finance minister’s office that fixing the national flag would be a difficult task so late in the evening,” said a senior Customs officer.

“This reflects a troubling misuse of authority and is tantamount to enforcing a culture of unquestioning and robotic obedience over merit and judgment,” reads the press statement issued by the Customs Officers Association on Friday evening. The officers of the Pakistan Customs Service have demanded the “ab initio cancellation of the transfer orders of the senior officer,” it added.

The association also protested against the suspension of officers who sought postings at their home stations due to serious personal issues.

The association urged the FBR chairman to take immediate steps to address these pressing issues and expressed its concern that failure to do so would result in further disillusionment among the ranks, according to the statement.

Tax collection

Once again, the government has missed the monthly target of Rs983 billion by a margin of Rs138 billion with only Rs845 billion collected in February—the seventh consecutive month of missed targets.

Against the Rs7.95 trillion target, the FBR provisionally collected nearly Rs7.34 trillion by the end of February.

The FBR collected Rs1.65 trillion more than last year, a significant achievement in an economy growing at less than 1% in the first quarter.

However, the government’s taxation measures and assumptions in setting the annual target of nearly Rs13 trillion have put authorities under pressure. The IMF compelled the country to impose new taxes, primarily burdening the salaried class and levying taxes on nearly all consumable goods, including medical tests, stationery, vegetables, and children’s milk.

For the July-February period, the FBR missed its targets for sales tax, federal excise duty, and customs duty but exceeded the income tax target.

Details show that income tax collection amounted to Rs3.52 trillion during the first eight months of this fiscal year—Rs835 billion higher than the previous year. The eight-month target was Rs3.25 trillion, which the FBR exceeded by Rs279 billion. Sales tax collection stood at Rs2.53 trillion, Rs284 billion (13%) higher than the previous year. However, the FBR missed the eight-month target by Rs579 billion. The target was Rs3.1 trillion.

The FBR collected Rs467 billion in federal excise duty, Rs124 billion higher than the previous fiscal year.

Despite doubling the duty on cement and imposing excise duty on lubricant oil and the sale of plots and buildings, the government missed the excise duty target by Rs132 billion. The target was Rs599 billion.

Customs duty collection stood at Rs820 billion, up by Rs98 billion. However, the government missed the eight-month customs duty target by Rs175 billion. The target was Rs995 billion.