The Federal Board of Revenue (FBR) has collected Rs4.86 trillion in taxes during the first 10 months of current fiscal year, leaving itself with a task to collect another Rs1.24 trillion in just two months to achieve the revised annual target.
According to the provisional information, the FBR generated Rs4.86 trillion in taxes during July-April of current financial year (2021-22), showing an increase of nearly 29 percent over the collection made during the same period of previous fiscal year.
In absolute terms, the collection was Rs1.1 trillion more than the previous year.
The previous government of Pakistan Tehreek-e-Insaf (PTI) had agreed with the International Monetary Fund (IMF) to collect Rs6.1 trillion during the ongoing fiscal year and had also imposed Rs360 billion worth of new taxes in a mini-budget.
Tax authorities now need to collect Rs1.24 trillion during the May-June period for achieving the revised target at an average of Rs20.4 billion a day. The government of Prime Minister Shehbaz Sharif is facing an uphill task to strike balance between its political objectives and restoring the health of the economy.
The premier could not increase the prices of petroleum products from May 1 despite an understating reached between the new economic team and the IMF.
Insiders said Finance Minister Miftah Ismail had assured the IMF that he would completely withdraw the subsidy on petrol from May 1 and would also reduce the subsidy on high-speed diesel by at least half.
They said that due to keeping prices unchanged, the government would have to give Rs51 billion in subsidy for May 1 to 15 period, which was so far the highest amount for any fortnight since March 1, when the previous government froze petroleum product prices due to political expediency. Any shortfall against the FBR’s revised target would also make the next year’s target challenging, as the IMF has asked Pakistan to fix the target at around Rs7 trillion for fiscal year 2022-23.
The FBR’s performance remained largely dependent on imports that contributed nearly 52 percent to the total tax collection, which again camouflaged the weaknesses in the domestic sales tax collection that remained negative. The FBR has missed its monthly targets in four out of the past five months.
The new government has changed the FBR chairman this week, bringing Asim Ahmed in place of Dr Ashfaq Ahmad. The outgoing chairman is at risk of being prosecuted on allegations of leaking tax details of a judge of the Supreme Court of Pakistan.
Insiders said that there were chances that a strong team may be installed at the FBR headquarters to take the matter forward. They said that the matter could be pursued once a presidential ordinance lapsed in two weeks that gave immunity from punishment for disclosing confidential information.
FBR PERFORMANCE: Overall, the FBR collected 64 percent, or Rs3.11 trillion, in indirect taxes – general sales tax, customs duty and federal excise duty, which were the three main sources of indirect taxes. Similarly, Rs2.5 trillion, or 52 percent, of the total collection was at the import stage. The FBR collected Rs1.75 trillion in income tax in the first 10 months of current fiscal year, up Rs383 billion (or 28 percent) over the same period of previous year.
Over Rs236 billion worth of income tax was collected at the import stage. The share of income tax in total revenue stood at 36 percent.
The FBR recorded 29 percent growth in sales tax collection in the July-April period due to heavy reliance on import taxes. It collected Rs2.64 trillion in sales tax, up Rs468 billion.
The total increase in sales tax collection was once again lower than the jump in sales tax receipts at the import stage due to negative growth in domestic sales tax collection.
The FBR collected Rs596 billion in domestic sales tax compared with Rs668 billion in the previous year, a reduction of 10.8 percent.
Contrary to that, sales tax collection at the import stage stood at Rs1.46 trillion in the first 10 months of current fiscal year as against Rs927 billion in the previous year. There was an increase of Rs541 billion (or 58 percent) in sales tax collection at the import stage.
The federal excise duty collection amounted to Rs250 billion, which was higher by Rs33 billion than the corresponding period of previous year.
The customs duty collection increased to Rs792 billion, showing an increase of Rs197 billion (or 33 percent).