The Federal Board of Revenue (FBR) has been facing a gigantic task of collecting Rs603 billion in last two months of May and June 2014 for display the revised tax target of Rs 2345 billion on its board.
A collection of over Rs300 billion will not be an easy task at a time growth of imports choked, inflation coming down and exchange rate improved in last few months.
The decreasing inflation and appreciation of rupee are good omen for the overall performance of the national economy but in FBR’s prospective these two developments have played havoc with its efforts to maximize revenue collection.
In first ten months (July-April) period of the current fiscal year, the FBR’s collection stands at Rs 1742 billion. For achieving the revised downward target of Rs 2345 billion, the FBR will have to collect Rs 603 billion in remaining two months (May and June) for achieving the desired target.
It seems that Finance Minister Ishaq Dar will have to implement its warning where he told tax authorities that if the collection did not improve then he would start sitting in Revenue Division.
But despite his warning, the FBR has remained unable in achieving the collection target of last month (April) as it missed out with huge margin of Rs 29 billion. Against the fixed target of Rs 196 billion, the FBR’s collection stood at Rs 167 billion in accordance with provisional tax collection figures compiled by the FBR.
The FBR is facing shortfall in achieving the revised tax target at a time when Pakistan and the IMF authorities are holding third review talks at Dubai.
The government had set an ambitious tax target of Rs 2475 billion on eve of budget for this ongoing fiscal year but the IMF had projected it to the tune of Rs 2345 billion from day one. Now the revised tax target of Rs 2345 billion seems in doldrums as the Board will have to collect over Rs 603 billion in just last two months of current financial year.
In view of bleak situation, the FBR’s top notches including Chairman FBR and four line members have devised policy to accelerate their efforts for maximizing revenue collection efforts for reaching nearing to the desired tax collection target of Rs 2345 billion.
Under the strategy, the FBR has directed the field formations to plug leakages, focus upon collecting withholding taxes and make all out efforts for achieving their specific monthly targets.
However, if the FBR’s missed out its revised target then it might be hard for the economic managers to avoid hiking the budget deficit target envisaged at 5.8 percent of the GDP in line with the IMF program. Either the government will have to rely upon the non tax revenue or cut down its expenditures to curtail the budget deficit within the agreed limits of the IMF.
