IMF may ask govt to bring mini budget if FBR shortfall widens

Fund would review economic situation of Pakistan including tax collection in the first review of the $6.2-billion loan programme likely to be held in Nov or Dec Fund had set first-quarter revenue target at Rs1.070 trillion

ISLAMABAD   -   The International Monetary Fund (IMF) may ask Pakistan to bring mini budget if tax collection shortfall widens in next couple of months.

The Federal Board of Revenue (FBR) had already faced Rs14 billion shortfall in tax collection during first month (July) of the current fiscal year. The FBR had collected Rs277 billion in July 2019 as against the target of Rs291 billion for the said month.

The FBR had witnessed shortfall in tax collection despite the fact that the government had introduced massive taxation measures in budget. Similarly, it had started campaign to bring non-taxpayers into tax net.

The IMF had set the first-quarter (Jul-Sept) revenue target at Rs1.070 trillion. The Fund would review the economic situation of Pakistan including tax collection in the first review of the $6.2-billion loan programme likely to be held in November or December.

The independent economists believed that government could not achieve the tax collection target during current fiscal year.

An economist working in government’s Economic Advisory Council said, “How will FBR achieve its target when the base of tax collection target has eroded? The government had fixed the tax collection target of Rs5.55 trillion for current fiscal year (FY2020) on the basis of revised target of Rs4.15 billion of the previous fiscal year (FY2019).

However, the FBR had collected Rs3.82 trillion during previous fiscal year. The government would have to take additional measures to bridge Rs330 billion, shortfall occurred in last year, he explained.

The FBR’s officials still believed that government would achieve the target without any additional revenue generation measures. “Tax collection usually remains lower in the first month of the fiscal year,” said an official of the FBR.

He added that tax collection had shown growth in July 2019 over the corresponding period of previous year. Meanwhile, the government had also started campaign, which would fetch additional revenues in next few months, he explained. 

According to the officials, FBR has already compiled data of almost 8-10 million individuals who own a house larger than five hundred square yards or a vehicle over 1,000 cc and bank accounts across the country.

The data will be used for issuance of notices in several phases. The distribution companies have already been requested to identify such people and also requested to consumers for converting bills to actual users. It has been observed that several bills are being issued on the name of a single person.

The FBR had given several chances to people to come into tax. The FBR has so far received total 2.310 million income tax returns. Over 70,000 draft returns were under the process so there are expectations that the total number might cross 2.4 million.

FBR has projected a target to enhance these returns numbers to 4 million for the tax year 2019.


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