Tax shortfall

The FBR is once again under the spotlight as it has miserably failed to broaden the tax network. It is alarming to note that the taxmen are facing a massive Rs684 billion shortfall in revenue collection with just two months to go for the end of the fiscal year. It goes without saying that a low tax base is the bane of our tax collection system. This is why a host of irrational taxes, levies and surcharges are slapped on commoners and the salaried class – all to sustain an elite club that is eating into the vitals of the economy.

Sadly, the government eyes the same oft-milked taxpayer segment yet again in order to make up for the tax shortfall it is faced with. It seems set to raise petroleum development levy by another Rs53 on a litre of petrol, even though it is already charging Rs27.4 more than the Rs80 ceiling, initially agreed with the IMF. This way, the levy collection in the 10 months of this fiscal year is more than Rs1.330 trillion as against an annual target of Rs1.468 trillion.

Thus, the petroleum prices are anticipated to rise further this month, irrespective of the global prices going down or not. The consumers will have to bear the brunt of the taxmen's underperformance only to ensure that the primary budget surplus target agreed with the global lender remains on track. It is heart-wrenching to note that energy prices in Pakistan are the region's highest.

With the crude oil prices feared to soar further in the international market amid the US-Iran conflict, it is getting untenable as inflation has already entered the double-digit territory. It has risen to a two-year high of 10.9% in April, driven by the government's decision to fully pass on higher fuel costs to consumers, thus making the prices of perishable items and grains to skyrocket. As estimated by the government itself, the Middle East conflict could cost up to $68 billion to the economy, necessitating a workable policy with national consensus, and not one with a knee-jerk response. There has to be an end to this madness of passing on the buck to consumers.