FBR moving in the wrong direction as smuggling rises, revenue collection declines

KARACHI: The Federal Board of Revenue (FBR) has missed revenue collection target by a whopping margin of Rs50 billion for August 2019 despite introducing several revenue and administrative measures in the last budget.

FBR officers and analysts believe that the Rs5.55 trillion revenue collection target for the current fiscal year is quite unrealistic, while the theatrics undertaken by the revenue body led by Syed Shabbar Zaidi would not help.

The measures taken by the Board have only discouraged legal imports, as most of the goods that were being legally imported earlier are now being smuggled. The increased duties, stringent curbs and regulatory hurdles have only deprived the government of revenue it collected on legitimate imports.

In the case of smuggling, government does not earn any revenue, but some of the officers in the system whether it is Customs, Inland Revenue, border security etc, make tons of money, which is ultimately moved out of the country.

An official said although there are no authentic numbers but it is believed that the quantum of smuggling is no less than legal imports. Around 40 percent of the smuggled goods come from borders with Afghanistan, Iran and India while 60 percent of the smuggling is conducted through misuse of green channel facility, replacement of transshipment cargo and replacement of export processing zone cargo.

Green channel facility actually meant for high profile and multi-national companies, however through a pre-planned scheme the facility was granted to used clothing and scrap. Moreover, importers were granted green channel status without meeting the criteria.

An official said misuse of green channel facility was causing a loss to the tune of billions of rupees to the national exchequer, and yet no action has been taken to right the wrong. The official said eliminating misuse of green channel facility and identifying the elements misusing the facility was not at all difficult, and the authorities only needed to conduct an audit of risk management system (RMS).

Prime Minister Imran Khan removed the then FBR chairman in May as it became clear to him that the revenue collection was heading towards a record shortfall. To achieve the ambitious revenue target of Rs5.55 trillion, Imran Khan on May 10 appointed Shabbar Zaidi from the private sector as FBR chairman to reverse the downward trends in revenue collection.

Shabbar Zaidi has launched a campaign against smuggling with FBR tams visiting retail outlets, malls and marts checking documents proving legal import of the foreign origin goods available for sale. This is a futile exercise as the retailers are not importers and they do not have import documents. It would have been better to target wholesalers, distributors and warehouses.

On one hand, the FBR is making legal imports impossible opening up for increased smuggling, while on the other hand the masses are over-burdened with series of taxes. An official said it seems a scheme is underway to ruint the economy and create a civil unrest in the country.

It seems that anti-Pakistan elements have always been in the ranks whether it is government, bureaucracy or defense, and they are implementing their agenda quite efficiently so far. An official said that as a practice officers went abroad for trainings and courses, and many of them indulged in corruption and anti-state practices after their return.

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