Pakistan’s revenue collection surpasses target

FBR collects Rs770b during October-December, additional measures now unlikely


Our Correspondent December 31, 2015

ISLAMABAD: Tax authorities have surpassed their collection target for the second quarter of the ongoing fiscal year, besides recovering a significant part of the shortfall during July-September on the back of a mini-budget introduced last month, reducing chances of additional measures.

Against the October-December target of Rs750 billion, the Federal Board of Revenue (FBR) provisionally collected Rs770 billion, a growth of 21.5% over the same period of the last year, said spokesman Dr Mohammad Iqbal.

Seminar on sales tax: Tax evasion becomes a norm that eats billions

However, the FBR remained short of its first half (July-December) target of Rs1.39 trillion, set by the International Monetary Fund. Against the target of Rs1.39 trillion, the FBR pooled Rs1.37 trillion, said Dr Iqbal. Although it fell short of the first-half goal by Rs20 billion, the tax machinery’s performance was far better than the previous months.

During the July-December period, the FBR collected Rs198 billion more than its collection in the comparative period of the previous year, an increase of 16.9%. However, it needs to hit a pace of 20% to meet the full-year’s target of Rs3.104 trillion.

The government has already implemented the mini-budget through Statutory Regulatory Orders (SROs) after its first-quarter revenue collection fell short of the target of Rs640 billion. The FBR managed to recover half of the Rs40 billion in December alone. It hopes to recover remaining shortfall in the second half of the current fiscal year.

Machiavellian approach to increase tax collection

For the current fiscal year, the IMF has assigned Rs3.104 trillion revenue collection target, which FBR Chairman Nisar Mohammad Khan has termed “over stretched and not easy to generate”.

Had the FBR again failed to achieve its second quarter target, the government would have been forced to implement additional measures in February.

The change

After a dismal performance, the government in November last year reshuffled the entire top brass of the tax machinery, bringing clean faces at the operational level.

Instead of improving administration and tax compliance, the government has relied on levying more taxes to cover the shortfall in collection. In its two-and-a-half-year tenure, the PML-N government has so far imposed Rs930 billion additional taxes, increasing the cost of doing business and making daily usable goods expensive.

This  week, it cut the industrial tariff by Rs3 per unit to reduce the cost of doing business but has not done anything to reduce the tax burden.



The decisions by Islamabad High Court and Lahore High Court not to grant a stay order against the Super Tax that the government has imposed on all banks and companies earning Rs250 million annually also helped the FBR to meet its second quarter target.

The Sindh High Court has issued a stay order, which the FBR has challenged in the Supreme Court.

However, unlike the past, the FBR claimed that it has not taken advances to meet the target, although there were reports that it approached some taxpayers to make advance payments. The figure was not as big as it used to be in the past.

Revenue collection up a little, tax hike up a lot

ECC meeting

The FBR struggled to enforce its writ and could not bring traders in the tax net without giving major concessions. The Economic Coordination Committee of the Cabinet on Thursday again extended the period of applicability of 0.3% withholding tax on banking transactions till January 31, 2016.

The ECC was informed that the reduced rate of 0.3% had been introduced by the government to allow FBR to hold negotiations with the trading community and resolve the issues confronted by them. The government also extended the last date for filing income tax returns by another month to January 31, as Prime Minister Nawaz Sharif would announce a tax amnesty scheme for traders to encourage them to come in the tax net. 

Published in The Express Tribune, January 1st, 2016.

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COMMENTS (5)

sehi banda | 8 years ago | Reply In Dubai, Pakistanis are 3rd largest investors (Investing Billions of Dollars) in real estate property after UK and India. Where does all that money come from? Obviously from corrupt people that move their money outside of Pakistan to whiten their black money. Now even the government is trying to help the black money people to white launder their money, if they pay just 1% tax on it. Money laundering is a crime all over the world, yet, Gov't of Pakistan is trying to legitimize it by giving incentive to black money people to come forward. The gov't should confiscate these individual's assets, instead of giving them incentives.
Khan | 8 years ago | Reply Its scandalous that our Parliamentarians aren't even paying their taxes. I think that if they refuse to pay taxes, then they have no resign their seat. People who don't want to pay taxes won't run for elections, and we'll likely end up getting rid of some of our most corrupt politicians.
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