The development may just have bolstered the position of Finance Minister Dar vis-à-vis the IMF that the government can stay on-budget in fiscal year 2022-23 and needs not raise additional resources.
By Muhammad Ali
ISLAMABAD: Tax authorities in Pakistan have met their five-month revenue collection target, officials have said.
Based on provisional data, the Federal Board of Revenue (FBR) says it has achieved its tax collection target for the first five months (July-Nov) of the current fiscal year by fetching PKR 2.688 trillion, registering an increase of 15.3 percent.
This comes as a validation of sorts for the position Finance Minister Ishaq Dar has taken vis-à-vis International Monetary Fund (IMF) negotiators – that Pakistan can stay on-budget through the fiscal year 2022-23 and does not need to raise additional resources.
The year 2023 being the year of a general election in Pakistan, the Fund staff is leery of policy slippages, leading the country’s budget deficit to shoot up and jeopardise the modest primary surplus Pakistani economic managers hope to achieve this fiscal.
The way to go for them is to raise additional resources now to obviate the eventuality of primary deficit at the year’s end.
But Prime Minister Shehbaz Sharif and his cabinet colleagues are wary of breaching the threshold of pain of a populace already groaning under the burden of stellar inflation, especially in an election year and with former Prime Minister Imran Khan on the hunt.
Against this backdrop, the FBR’s revenue collection success looks like a sign that the government can stay on-budget – but there are reasons against reading too much into it.
Already, nominal growth in the aftermath of severe floods has been revised massively and is now projected at around 25 percent with real GDP growth rate of 2 percent and average inflation of 23 percent.
However, the FBR’s revenue collection over the first five months of the current fiscal has grown by roughly 15 percent, short of the nominal growth projected at 25 percent.
What is more, even this growth has been achieved with a tailwind of over 20 percent average inflation.
This clearly means the FBR is set to miss the FY 2022-23 revenue collection target of PKR 7.47 trillion by a wide margin.
A top official speaking on condition of anonymity said the FBR had to collect PKR 965 billion in December to meet its semi-annual target, which is going to test the Board to its limits.
He pointed out that the FBR had so far received about 2.8 million tax returns so far against 3.6 million returns received over the whole of the last financial year.
In any case, according to the FBR announcement, the Board continues to demonstrate excellent performance in revenue collection for the fifth consecutive month of the current financial year.
It said the FBR has exceeded both the five months target of PKR 2,680 billion as well as monthly target of PKR. 537 billion despite import compression and zero rating on POL products.
Provisional gross revenue collection has been recorded as PKR. 2,823 billion for the first five months as against PKR 2,454 billion during the corresponding period last fiscal. Collection of direct taxes leads the trend, registering 43 percent growth.
In November, the FBR collected PKR 538.2 billion compared with PKR 488 billion in the same month last fiscal year, reflecting an increase of 11.5 percent. The FBR also processed refunds to the tune of PKR 135 billion as against PKR 124 billion last year.
FBR says it recognises the endeavours of all field formations and officers for their untiring efforts and commitment to optimising revenue collection in difficult times where sales tax collection on imports is showing negative growth.
“Achievement of targets was made possible due to extraordinary steps taken in the areas of recovery, monitoring, and day-to-day vigilance”, a spokesperson said.
The FBR collected PKR 24.17 billion during the five-month period in Income Tax arrears as against PKR.11.69 billion collected last year. Of this, PKR 8.98 billion was collected in November, against PKR.6.65 billion collected last November.
“The revenue collection trends during the first five months of the financial year augur well for the achievement of the assigned revenue targets for the current financial year”, said the FBR.
“This unprecedented growth in tax revenues underscores the resolve of the Government and FBR to make Pakistan a prosperous nation.”
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