The Federal Board of Revenue (FBR) has collected Rs1.33 trillion in taxes during the first four months of the current fiscal year, managing to achieve the assigned target despite missing the monthly one for the third consecutive time.
The July-October tax collection target of Rs1.322 trillion has been achieved, primarily because of high collection in the first month, as despite attaining the goalpost there is no reason for celebration for the government.
The four-month cumulative growth in revenue collection was hardly 3.5%, which is almost two and half times less than the prevailing inflation rate in the country.
As against the July-October target of Rs1.322 trillion, the FBR provisionally collected nearly Rs1.333 trillion, according to the FBR officials. The collection was also higher by Rs43 billion or 3.4% when compared with Rs1.29 trillion collected in the same period of last fiscal year.
The Rs1.33 trillion worth of collection may further increase by Rs5 to Rs8 billion, once the reconciliation of figures and some pending payments are cleared by the banks on Saturday.
The FBR missed the monthly target of Rs352 billion by a wide margin of Rs24 billion. The shortfall may slightly reduce once the final figures are available.
The 3.4% growth rate is not sufficient to achieve the annual tax collection target of Rs4.963 trillion, which needs a pace of over 22%. The International Monetary Fund has projected over Rs300 billion shortfall in collection and is asking Pakistan to introduce a mini-budget.
The collection remained under stress due to prevailing economic conditions as a result of Covid-19 and taxation relief measures taken in the past, Dr Mohammad Ashfaq, member Inland Revenue Operations of the FBR, said.
He foresaw pick in the tax collection from the third quarter of the fiscal year because of better economic conditions and materialisation of tax demand orders being issued against the taxpayers. So far, the FBR field formations have issued over Rs35 billion demand orders in cases that were untouchable in the past, said the member operations.
The tax-wise collection details showed that the collection was more skewed towards indirect taxes.
The share of income tax in total tax collection further shrank to 35% and the government is burdening the economy and people with more indirect taxes.
Of Rs1.33 trillion, the income tax collection was just Rs466 billion. The FBR has missed the income tax collection target by Rs41 billion for the first four months of the fiscal year. However, the income tax collection was still better by about 4% as compared to Rs452 billion collected last year.
Sales tax collection stood at Rs582 billion against receipt of Rs546 billion in the same period of last fiscal year, showing a growth of 6.6%. The sales tax target was Rs546 billion that the FBR has surpassed. It also gave roughly Rs60 billion sales tax refunds from its collection, which greased the businesses.
The four-month federal excise duty collection amounted to Rs81 billion, up by Rs12 billion.
Customs duty collection stood at Rs204 billion as against collection of Rs208 billion in the same period of last fiscal year, showing a decline of 2%. But the collection was Rs21 billion higher than the target.
The customs duty collection has been impacted by the reduction in imports and the government’s decision to exempt over 1,600 tariff lines from the duty. However, it has imposed additional customs duty to recoup some of the losses.
A low collection is one of the key reasons behind soaring public debt. A brief report by the Policy Research Institute of Market Economy (PRIME) has again warned about the debt sustainability of the country.
The report, released on Thursday, stated that when the incumbent government came to power, the country was heavily indebted. One of the electoral promises was to reduce the debt burden.
But over the course of two years, Pakistan’s foreign debt and liabilities have increased from $95.2 billion to $112.8 billion, an addition of $17.6 billion or 18.5%.