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ISLAMABAD: Contrary to the official expectations of a maximum revenue collection from the one time levy of flood surcharge of 15 per cent on income tax, rich people evaded payment of the surcharge on their incomes.
Total revenue collection from the levy stood at Rs10 billion till Dec 31, 2011, as against the initial projec-ted target of Rs36 billion, reflecting a shortfall of Rs26 billion.
An official in the Federal Board of Revenue told Dawn that rich taxpayers paid around Rs1 billion as surcharge on income tax until Dec 31 with their corporate returns as against the projected target of Rs20 billion from the sector, leaving a massive shortfall.
However, collection of surcharge from the non-corporate sector, which mostly included salaried class, remained well above Rs8 billion.
The surcharge was levied to raise revenue for the flood affected people in 2011. FBR officials were, however, unable to give a correct picture of the possible revenue collection from the surcharge.
At the same time, tax officials misled the standing committees on finance and senior political leadership by showing higher results from the levy.
On Sept 9, the FBR informed the National Assembly standing committee on finance that a revenue target of Rs36 billion had been projected against the levy of surcharge on income tax. At that time, revenue collection was reported at Rs8 billion.
After a gap of one month, the FBR officials came up with another figure and projected a revenue target of Rs20 billion from the surcharge on income tax. On Oct 12, the collection figure was projected at Rs8.5 billion.
The then FBR chairman had claimed that an additional amount of Rs20 billion would be collected from the corporate sector, which was to file returns with the income tax department till Dec 31, 2011.
However, actual collection from the corporate sector remained around Rs1 billion.
According to a source, the corporate sector did not pay the tax owing to lacuna in the ordinance issued for the levy by President Asif Ali Zardari. However, no one questioned the lacuna in the ordinance.
It was the responsibility of the tax officials to leave no lacunas for taxpayers that could lead to evasion, a senior tax official told Dawn on condition of anonymity.
However, there was no plan of the government to carry out audit of the corporate sector at a time when elections are due this year and the government would not confront the business tycoons, the official said.
At the same time, the government is yet to appoint a regular head of the FBR as additional charge was given to member custom Mumtaz Haider Rizvi.
There are speculations that the government might appoint a regular chairman within one week.
