ISLAMABAD - The Federal Board of Revenue (FBR) has noted the revenue collection target would largely depend on the performance of the economy against the tar­gets and the effective enforce­ment by FBR.

“The FBR revenue forecasts for FY 2020-23 based on ex­pected collection for FY 2022 i.e. Rs6,100 billion, buoyancy estimates and macroeconomic indicators is Rs7,004 billion. This excludes the policy and administrative/enforcement measures,” said FBR in its re­port ‘Evidence-Based Revenue Forecasting FY 2022-23’. The FBR report included tax collec­tion target of Rs7,004 billion, which was initially set in annual budget. However, later, target was upward revised to Rs7,450 billion on the direction of Inter­national Monetary Fund (IMF).

The autonomous growth has been applied on base year’s (FY 2021-22) expected collection (Rs6,100 billion) for each re­spective tax, which estimates an increase of Rs1,004 billion for the FY 2022-23. This addition has been added in the expect­ed collection of FY 2021-22, thus the revenue forecast for FY 2022-23 has been obtained to the tune of Rs7,004 billion. The required growth over the expected collection of FY 2021-22, i.e. Rs6,100 billion would be 14.8 percent for FY 2022-23.

The FBR has projected that the tax-to-gross domestic product (GDP) ratio at 9.5 per­cent during 2022-23 against 8.5 percent in 2021-22. The FBR revenue collection has shown a steady increase in the last few years. Despite ongo­ing COVID-19 challenges such as lockdowns and disruptions of international supply chains, the growth in revenues was 4.4 percent immediately after the first pandemic year, which was further increased to 18.7 per­cent in 2020-21. The FBR’s tax-GDP ratio remained between 8.4 percent to 9.8 percent during last five years. During FY 2018-19 and FY 2019-20, tax-GDP ratio declined, which was mainly attributed to the COVID-19 pandemic-related economic challenges. However, again it started to increase in FY 2020-21 as pandemic was effectively managed in Paki­stan and world was also open­ing up, the FBR report added.

FBR report includes tax collection target of Rs7,004 billion, which was initially set in annual budget. However, later, target was upward revised to Rs7,450 billion on direction of IMF

The overall FBR taxes are buoyant and there is a poten­tial for achieving growth in tax revenues provided that macro­economic indicators are doing well. It is evident from last 20 years data that FBR revenues increased substantially. The tax-wise breakdown reveals that the direct tax DT (domes­tic) and sales tax ST (domestic) are most buoyant with 1.16 and 1.12 respective buoyancy values. On the other hand, ST (M), customs and FED have relatively lower buoyancies. In this regard, addressing the issues of narrow base, unnec­essary exemptions and under invoicing/valuation problems at import stage can be instru­mental for making these taxes more buoyant, thus enabling the revenue organisation to fetch more tax revenues.

It is estimated that the to­tal FBR collection for the next year would be Rs7,004 billion. However, the revenue collec­tion and achieving of target would largely depend on the performance of the economy against the targets and the ef­fective enforcement by FBR.