ISLAMABAD   -   The Federal Board of Revenue (FBR) would have to collect additional Rs1.72 trillion in current fiscal year to achieve the mammoth annual tax collection target of Rs5.55 trillion. The government had fixed the tax collection target of Rs5.55 trillion for current fiscal year (FY2020) on the basis of revised target of Rs4.15 trillion of the previous fiscal year (FY2019). However, the FBR had missed the revised target by Rs330 billion in FY2019.  Therefore, the FBR would have to collect additional Rs1.72 trillion in just one year. “Tax collection will increase during current fiscal year, as the FBR decided to chase the non-taxpayers, who had not availed the tax amnesty scheme,” said an official of the FBR. He further said that government had already made the list of non-taxpayers with the help of Nadra. The FBR had received data of property from Punjab and Sindh. As per income tax ordinance every car owner irrespective of income is bound to file tax returns. Similarly, those who have one kanal and above house is also bound to file tax return, he added.

The government had agreed with International Monetary Fund (IMF) to set difficult tax collection target of Rs5.55 trillion for the ongoing financial year. The PTI led government had failed to enhance the country’s tax collection not even by a single percent in its first year in office despite introducing two mini budgets and a tax amnesty scheme. The FBR had collected Rs3820 billion during previous fiscal year that ended on June 30 missing the annual tax collection target by Rs578 billion. The FBR had also missed the revised tax collection target. The FBR has so far collected Rs 3,820 billion during the year 2018-19 against the downward revised target of Rs 4,150 billion, reflecting a shortfall of Rs330 billion.

The Rs3.820 trillion also included Rs45 billion on account of tax amnesty, which was collected on June 30, 2019. Later, the amnesty scheme was extended till July 3 and FBR generated Rs70 billion. Tax collection had remained lower than the preceding year when FBR had collected Rs3842 billion. A senior official of the FBR said that shortfall increased due to the slowdown in economy and government’s incentive policies during previous year. PTI chairman and incumbent Prime Minister Imran Khan in past had claimed to double the tax collection of the country. However, his government had failed to maintain the previous year’s level of tax collection despite introducing two mini budgets and a tax amnesty scheme.

In September 2018, the PTI led coalition government had downward revised the tax collection target by Rs37 billion for the ongoing fiscal year 2018-19 despite taking additional taxation measures of around Rs180 billion. The previous PML-N government had set the tax collection target for Federal Board of Revenue (FBR) at Rs4435 billion for the current financial year. However, the PTI government had downward revised the target to Rs4398 billion despite introducing additional taxation measures.  Later, in January 2019, the government had announced second mini budget. The government in May 2019 announced tax amnesty scheme. The tax amnesty scheme called Assets Declaration Scheme 2019 had extended till July 3, 2019.

The FBR had repeatedly blamed the government’s incentives policies responsible for the massive shortfall in tax collection during year 2018-19. According to the FBR, reasons for massive decline in tax collection are tax incentives on salaries given by last government, telecom tax suspended by the Supreme Court of Pakistan, reduced tax rates on POL products and slowdown of development programme in the country. The official said that tax incentives on salaries given by the last government and telecom tax suspended by the Supreme Court of Pakistan had caused revenue losses of over Rs50 billion so far. Similarly, reduced tax rate on oil products had also caused loss of Rs70 billion. However, in last two to three months, the government had restored taxes on mobile phone cards and oil products. The massive tax collection shortfall would further increase the budget deficit of the country. Pakistan’s budget deficit had already swelled to record Rs1.9 trillion (5 percent of GDP) in just nine months (July to March) due to massive increase in expenditures and shortfall in tax collection.

The previous PML-N government had estimated budget deficit at 5.1 percent of the GDP for the entire current fiscal year. However, the deficit has already swelled to the budgeted target in only nine months period. A top official of the ministry of finance last month had said that budget deficit would touch Rs2.7 trillion in the current financial year, which would be equal to 7 percent of the gross domestic product (GDP). However, the nine months’ trend and massive shortfall in tax collection showed that budget deficit may go to around Rs3 trillion (7.5 percent of the GDP) by the end of current fiscal year.