Finance Minister Ishaq Dar has directed the Federal Board of Revenue (FBR) to make every effort to realize the true potential of taxation in the country as the body could not meet the target for the outgoing month of December 2022.
The Finance Minister said this while presiding over a meeting on revenue performance of FBR in Islamabad.
During the meeting, FBR Chairman Asim Ahmed gave a detailed presentation about the revenue targets for the months of November and December 2022 and the performance of FBR.
It may be mentioned here that the FBR is facing a revenue shortfall of Rs 225 billion for the outgoing month of December 2022. The tax collection machinery collected only Rs 740 billion against the desired target of Rs 965 billion.
This growing revenue shortfall will now make it difficult for the government to convince the IMF to revive the IMF’s stalled program without additional and substantial fiscal measures such as the mini-budget for the current fiscal year. .
The government is considering options to levy a flood levy in the range of 1 percent to 3 percent to raise Rs 60 billion. Other tax measures are also on the cards in terms of direct taxes. But the government is in a catch-22 situation and has identified only those sectors that have made huge profits as taxing across the board in the current stagnant period could further damage the already sluggish economic activity.
However, FBR sources argued that the revenue collection target fell short as a result of pressure on imports and protracted litigation in the higher judiciary. He has informed the IMF that the collection of pending revenue will be completed by March 2023. Therefore, the FBR’s annual target of Rs 7.47 trillion will remain intact, he believes.
But independent analysts believe it will be difficult for the FBR to achieve the desired tax collection target of Rs 7 trillion by the end of June 30, 2023. -December) period for the current financial year against the desired target of Rs 3.673 trillion. The FBR collected Rs 2.9 trillion in the same period (July-December) of the previous financial year 2021-22.
According to the official statement, the FBR has shown excellent revenue collection performance in the first six months of the current financial year 2022-23 and has collected Rs 3,428 billion as against Rs 2,929 billion during the first six months. There has been an increase of 17% compared to last year.
The FBR collected Rs 740 billion for December 2022 as against Rs 599 billion in the same month last year, showing an impressive growth of about 24 percent over the same month last year. This performance is despite heavy import compression and zero rating on petroleum.
Direct tax collections are growing at a robust pace, showing a 66% increase during December 2022 as compared to December 2021, which is a clear indication of the policy of shifting the tax burden to the rich and wealthy. An unprecedented 49 percent increase in direct tax collection has also been recorded for the first six months. This was achieved despite the fact that some of the Rs 250 billion revenue impacting policy interventions introduced by the Finance Act 2022 could not be implemented as they are pending in the courts. The target for the month of December was 965 billion rupees, which could not be achieved due to the above mentioned reasons.
The revenue collection performance is also exceptional when seen in the context that the FBR has also issued refunds worth Rs 176 billion during the first half of the current financial year, which was Rs 149 billion during the same period last year. .
