The premier issued the warning during a meeting, sources said.
The FBR’s top management had been called for a briefing on the board’s performance in relation to revenue collection and tax dodgers.
Sources said that after seeing poor results, the prime minister asked whether the FBR could be reformed, or a new institution be established.
FBR spokesman Dr Mohamed Iqbal did not comment on details of the meeting, but he said the prime minister emphasised the need for reforms, and asked about improvement of the authority’s performance and integrity.
The FBR official said that the prime minister stated that reforming the FBR is critical to meet the government’s goal of providing social justice and relief to the masses.
Khan’s comments indicate his displeasure with taxmen, as he has declared that the government would double tax revenues from the Rs3.842tn collected in the previous fiscal year.
To press on with the plan, the prime minister had picked Jehanzeb Khan as FBR chairman.
Jehanzeb Khan is an officer of the Pakistan Administrative Service.
The FBR comprises a more than 20,000-strong workforce of the Inland Revenue Service and Customs Service.
Sources said that the Prime Minister Khan was dismissive of the presentation prepared by the FBR showing an apparently rosy picture of the tax affairs.
Finance Minister Asad Umar has already expressed dissatisfaction with the FBR’s performance.
In spite of the difficulties, Prime Minister Khan reiterated his confidence in the FBR chairman.
He also defended Jehanzeb Khan’s appointment during an interaction with the media two months ago.
The FBR could collect only Rs1.1tn in taxes in first four months of the current fiscal year, falling short of the revised target by Rs68bn.
The growth in revenue collection was less than 7%.
For the current fiscal year, the government has already revised downwards the annual target to Rs4.398tn, and it seems that if the situation does not improve, the FBR may face a shortfall of between Rs150bn and Rs175bn by the end of the year.
On Thursday Minister Umar said that the Pakistan Tehreek-e-Insaf (PTI) government’s success or failure hinged on the FBR’s performance.
The poor tax collection and its implications for the budget deficit turned out to be the biggest concern for the International Monetary Fund (IMF) during ongoing technical-level talks.
Due to the shortfall in tax revenues, the budget deficit is expected to widen to around 1.4% of gross domestic product (GDP) in the first quarter.
Sources said that there is talk of whether to continue with the existing FBR chairman or bring in a new chief.
However, blaming the FBR chief alone for the poor performance would not be justifiable, as the authority has always been resistant to reform.
For the past over one and a half year, FBR personnel have opposed the implementation of administrative and policy reforms proposed by the Tax Reforms Commission.
The FBR has resisted even the simplest things like the installation of a trace and tracking system in industries that are prone to high tax evasion, for example, cigarette manufacturers.
Also, despite the finance minister’s instructions, the FBR has not developed a simple one-page income tax return form for the salaried class.
The FBR has developed a new return form for the salaried class but it is still too complicated for many.
The FBR has also resisted the appointment of technically-qualified people on the board of Pakistan Revenue Automation Private Limited, a subsidiary of the FBR that is responsible for using information technology for tax collection.
There are nearly 3.8mn National Tax Number (NTN) holders in Pakistan, but only 1.4mn of them file income tax returns.
The FBR has not been able to catch even these 2.4mn people who have the NTN but are not filing returns.
Efforts have also not been made to improve audit functions, with an almost negligible workforce assigned the audit task.
The FBR has issued advice to the State Bank of Pakistan to release sales tax refunds amounting to Rs8.7bn to facilitate exports.
The payment will benefit 739 claimants from five zero-rated export-oriented sectors – textile, carpet, leather, sports goods, and surgical instruments.
The refund will be made against 4,117 refund payment orders issued up to November 8, 2018.
The tax refunds will be transmitted electronically to respective bank accounts of the claimants by the State Bank by the close of banking hours today (November 12).
The payments will be made to all those claimants who have provided their bank account details in the IBAN (International Bank Account Number) format.
