Government Fails to Meet Tax Collection Target for First Five Months

Islamabad: The federal government has failed to meet its tax collection target for the first five months of the current fiscal year, recording a tax shortfall of 356 billion rupees.
For the period from July to November, the government had set a tax target of 4.64 trillion rupees, but only 4.28 trillion rupees in taxes were collected. Tax authorities are hopeful that an additional 10 billion rupees may be collected by the end of the week, but November alone saw a tax shortfall of 166 billion rupees.
To meet the annual tax target of 13 trillion rupees, the Federal Board of Revenue (FBR) would need to increase tax collections by 40 percent. However, the FBR has not been able to achieve this pace so far.
Data reveals that from July to November, the FBR failed to meet its targets for sales tax, federal excise duty, and customs duties. However, it exceeded its income tax target, though even this was not fully met in November. In the income tax category, the FBR collected 1.983 trillion rupees, which is 27 percent (415 billion rupees) higher than the same period last year, and 190 billion rupees above the target. Sales tax collections amounted to 1.546 trillion rupees, which is 23 percent more than last year but 310 billion rupees short of the target.
The federal excise duty collection stood at 277 billion rupees, 25 percent higher than the previous fiscal year, but 100 billion rupees short of the target. Customs duties contributed 473 billion rupees, a 9 percent increase compared to last year, but 137 billion rupees less than the target.
In November, the FBR collected 376 billion rupees in income tax, 9 billion rupees below the target, while sales tax collections were 311 billion rupees, falling short by 133 billion rupees. Federal excise duty collections were 63 billion rupees, 18 billion rupees below target, and customs duties were 96 billion rupees, 42 billion rupees short of the goal.
To address the FBR’s shortcomings, the government has approved a special package worth 32.5 billion rupees, which includes providing 1,300cc cars to grade 17 and 18 officers and awarding all officers four additional salaries.
Recently, during informal discussions with the International Monetary Fund (IMF), the IMF expressed concern over the tax shortfall and decided to wait until December for further action. Based on December’s tax collection, the IMF may ask Pakistan to present a mini-budget, which could include new taxes on fertilizers, imports, contractors, and professionals.