The figure provided to Republica by the Financial Comptroller General´s Office shows that the SSF was able to collect Rs 742.46 million in the last fiscal year. “The amount is nowhere near what we had expected,” a senior official of SSF said.[break]
Although the source acknowledged the fund had not officially projected any figures, he said the government was expecting to raise “far more amount than this”.
The collection of social security tax began in fiscal year 2009/10. Since then, each employee working in the formal sector has been contributing one percent of the basic monthly salary to the SSF.
Though there is no official data on number of employees working in the formal sector, it was expected that the fund would raise around Rs 80 to Rs 120 per month from each of the 1.5 million employees working in the private sector and roughly 500,000 civil servants. If these estimates are to be followed, the government should have raised somewhere between Rs 1.92 billion and Rs 2.88 billion within a year.
“But the shortfall in amount has made us suspect whether employers are complying with the mandatory provision of contributing one percent of the basic salary to the fund,” the official told Republica.
If this is not the case then the SSF must have overestimated the number of employees in the formal sector, he said. “If not, the tax office has failed to deposit the total sum that was subjected to the fund.”
The concern raised by the official is valid as the Finance Ministry - the parent authority of tax offices in the country - in the fiscal year 2010/11 had diverted the entire amount raised for the SSF to other government accounts.
The ministry at that time had said the amount was deposited in other accounts as “a separate heading for social security tax was not created in the government´s account book” in that year. Though the government has already formed a committee to recover the “misplaced” amount, it has not delivered any positive result so far.
The government now suspects the work of creating “a separate heading for social security tax in the government´s account book” may not have taken place until November of last year when the annual budget formally approved formation of the fund.
This means the amount collected in the first four months of last fiscal year may have been deposited in another account as in the previous year. But even then the fund should have raised somewhere between Rs 1.28 billion to Rs 1.92 billion.
The irony is: even if we assume monthly salary of two million people employed in the formal sector to be Rs 5,000, the fund should have raised at least Rs 1.2 billion in a year.
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