ISLAMABAD-The government is likely to miss the tax collection target by around Rs1500 billion during ongoing fiscal year mainly due to inability of Federal Board of Revenue (FBR) and slowdown in economic activities due to coronavirus.

Federal Minister for Planning and Development Asad Umar on Saturday said that tax collection could reduce by Rs1400-Rs1500 billion during ongoing financial year. The federal government had set ambitious tax collection target of Rs5550 billion for the ongoing financial year. However, later, the FBR was continuously missing its monthly tax collection targets. Therefore, the International Monetary Fund (IMF), on the request of Pakistan, had reduced the tax collection target to Rs5270 billion from the budgetary projection of Rs5550 billion.

The FBR was struggling to achieve the revised tax collection target even before the coronavirus. However, the coronavirus has halted the economic activities in the country, which would further dent the FBR’s efforts to achieve the revised tax collection target. The FBR was already facing massive shortfall in tax collection of Rs470 billion in nine months (July to March) of the current fiscal year. The FBR had collected Rs3050 billion in July to March period of the year 2019-20 as against the revised target of 3520 billion, leaving the shortfall at Rs470 billion.

Apart from other issues, the FBR was also facing governance issue after former chairman FBR Shabbar Zaidi went on leave for indefinite period. During this period, the FBR had faced over Rs100 billion shortfall each in January and February and Rs200 billion in March 2020. However, the government has now appointed Nausheen Javaid Amjad as the Chairperson Federal Board of Revenue (FBR). In her maiden interaction with the media after appointment, she said that the FBR would make all efforts to collect each and every due penny for the sake of national exchequer.

The FBR had also appealed to the taxpayers to pay their due taxes in time to increase the funds available with government. The body said that the government will utilize these resources to effectively provide services to the people and will fight the Covid-19 pandemic in a befitting manner.

On the other hand, the uncertainty created by the coronavirus pandemic might also result in shortfall of Rs400 billion in non-tax collection during current fiscal year. The government is unlikely to complete the privatization programme during ongoing fiscal year due to the prevailing situation. The government had projected to generate around Rs400 billion by privatizing the public sector entities before June 30, 2020. The massive shortfall in tax and non tax collection would broaden the budget deficit of the country. Pakistan had committed with the IMF to reduce the budget deficit to 7.2 percent of the GDP (Rs3.15 trillion) in the current fiscal year from all-time high Rs3.44 trillion (8.9 percent of the Gross Domestic Product) in last fiscal year.

The budget is expected to enhance in the second half (January to June) of the current fiscal year due to uncertain economic situation in the country. The government had successfully controlled Pakistan’s budget deficit which was recorded at Rs994.7 billion during first half (July to December) of the current fiscal year despite massive shortfall in tax collection. The country’s expenditures were recorded at Rs4226.6 billion as compared to the revenues of Rs3231.9 billion in July-December period of the ongoing financial year. The budget deficit was recorded at Rs994.7 billion (2.3 percent of the GDP), according to the data of ministry of finance.