Pakistan Faces Potential Rs560bn Tax Shortfall Without Government Support
Islamabad: Pakistan’s tax machinery has warned Prime Minister Shehbaz Sharif that without urgent assistance from the Attorney General’s Office, the country may miss even the revised revenue target for the first half of the fiscal year by up to **Rs560 billion**.
During a high-level meeting on Thursday—held a day after IMF Resident Representative Mahe Benici met the Prime Minister—FBR officials briefed the government on the worsening revenue situation. No official statement was issued regarding the IMF meeting, though a government source described it as a “courtesy tea invitation.”
### **Revenue Concerns and IMF Pressure**
Officials told the Prime Minister that Pakistan’s economy remains fragile and not yet ready for full recovery. Participants noted that lowering interest rates could support economic growth but may deepen pressure on Pakistan’s already weak foreign exchange reserves.
Some attendees supported allowing the rupee to depreciate to boost exports and support falling FBR revenues. The IMF has also demanded Pakistan shift to a fully flexible exchange rate.
According to FBR officials, nearly **Rs200 billion** can be recovered this month from court cases currently pending. With these recoveries—and with support from the Attorney General—the revenue shortfall could be contained at **Rs362 billion**. However, if cases do not conclude in FBR’s favour, the shortfall could rise to **Rs562 billion** even against the reduced target.
### **Revised Targets Still Out of Reach**
The original July–December tax target of **Rs6.7 trillion** was cut to **Rs6.49 trillion**, yet FBR is still expected to fall short by at least **Rs560 billion**. Against the original target, the shortfall would exceed **Rs775 billion**. FBR has already missed its first five-month target by **Rs413 billion**.
The Finance Ministry warned that if revenue losses widen, the government would be forced to cut expenditures, as the IMF will not allow relaxation in the primary budget surplus target. The IMF recently approved a **$1.2 billion** loan tranche on the condition that Pakistan introduces a **mini-budget** to offset revenue losses.
### **Concerns Over FBR Performance**
Participants criticised FBR for relying heavily on other institutions—such as the State Bank, Power Division, Petroleum Division, and the Attorney General—rather than improving its own performance. This comes at a time when FBR has provided **1,000 vehicles and significant salary raises** to its officers in hopes of improving efficiency and achieving the original **Rs14.13 trillion** annual target.
Prime Minister Shehbaz Sharif directed FBR to issue refunds to oil marketing companies, but the Finance Ministry refused to release funds. He also instructed FBR to accelerate efforts to raise the **tax-to-GDP ratio to 11%** and appreciated customs’ use of technology and AI to reduce clearance times.
Provincial governments were asked to continue supporting FBR in cracking down on tax evasion and illegal factories. Officials briefed the PM on recent seizures of large quantities of illicit cigarettes.
Federal constitutional courts have scheduled the crucial **super tax case** for next month—meaning no decision is expected in December. FBR has repeatedly assured the IMF that the ruling will be in its favour.
