Even though an unprecedented Rs390 billion in new taxes has been imposed through four mini budgets in a single fiscal year, the tax machinery has failed to achieve its revenue target and is making attempts to conceal its dismal performance.
After posting negative growth in its revenue collection in January, the Federal Board of Revenue (FBR) has now missed its collection target for this month by a wide margin as well. According to provisional results, the FBR collected Rs182 billion till the end of Friday evening, showing a growth of 11.5% over last February’s collection of Rs163.2 billion. The target for February was Rs210.2 billion.
The results show that the extraordinary measures government has taken to boost revenue without overhauling the tax machinery are not yielding the desired results. It has so far introduced four budgets in seven months.
If one believes in FBR, the provisional accumulative tax collection from July through February of this fiscal year amounted to Rs1.519 trillion, which was 11.7% or Rs159 billion higher than the collection made in the comparative period of the previous fiscal. By another account that the FBR has given to conceal negative growth in January, the eight-month accumulative collection should be Rs1.524 trillion.
The first eight month results show that the government will not be able to achieve the indicative tax target ceiling, set by the International Monetary Fund (IMF) for the July to March period.
The government has already twice revised the annual target downwards. As against the Rs2.810 trillion collection target that was approved by the parliament, the government first revised it down to Rs2.756 trillion and then to Rs2.691 trillion. Now, the FBR is saying that it will not be able to collect more than Rs2.660 trillion.
The government penalised consumers for inefficiencies of the tax machinery when it increased the general sales tax rate on all petroleum products, first from 17% to 22% and then 27%.Through another mini budget, it imposed additional regulatory duties on 314 items including 5% on import of furnace oil, which will make electricity generation expensive. It has also increased taxes on all types of imports by 50%. Withholding tax rates have also been enhanced.
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