Tax-ing ordeal: Govt misses half-year collection target by Rs90b

Published: January 1, 2015
As compared to the collection of Rs1.031 trillion in the first half of previous fiscal year, the FBR has managed to achieve only 11.4% growth rate. STOCK IMAGE

As compared to the collection of Rs1.031 trillion in the first half of previous fiscal year, the FBR has managed to achieve only 11.4% growth rate. STOCK IMAGE


The government has missed its half-year tax collection target by a margin of Rs90 billion, a gap that is expected to widen further.

According to figures compiled by the Federal Board of Revenue (FBR) till Wednesday evening, the tax machinery pooled Rs1.157 trillion from July through December of the current fiscal year, falling short of the first-half target of Rs1.246 trillion. The collection of Rs1.157 trillion was achieved despite holding back tax refunds.

Gross collection during the ongoing fiscal year amounted to Rs1.192 trillion and the FBR paid Rs38.5 billion in refunds. The refunds were Rs20 billion or 35% less than the comparative period, showed the provisional results.

The collection is expected to improve by Rs5 billion once the figures are finalised. However, it would not be sufficient to achieve the first-half target of Rs1.246 trillion. The first-half collection fell short of even conservative estimates of Rs1.195 trillion of the  International Monetary Fund (IMF) by a margin of Rs39 billion. This has led to a breach of indicative target imposed by the IMF.

After witnessing massive shortfalls in tax revenues, the government on Tuesday introduced a minibudget and increased the General Sales Tax rate from 17% to 22% on all petroleum products. The 5% added tax would help collect an additional Rs17.5 billion during the remaining period of the current fiscal year, said Prime Minister Nawaz Sharif while speaking to media on Wednesday.

The Parliament has approved the Rs2.810-trillion tax target for the FBR this year. On this basis, the FBR worked out a Rs1.246-trillion target for the first half. However, the IMF has already lowered its projection to Rs2.756 trillion and missing the indicative target of Rs1.195 trillion suggests that even this lowered one will be difficult to achieve.

After increasing the GST on petroleum products, the next option for the government is to slash the development budget aimed at staying within the IMF-imposed budget deficit ceiling of 4.8% of GDP, according to sources in the Ministry of Finance.

As compared to previous fiscal year’s collection of Rs1.031 trillion in the first half, the FBR has managed to achieve around 12% growth rate. However, it fell short of the needed rate of 21% to achieve the first-half target.

The Parliament has approved the Rs2.810-trillion annual revenue collection target for the FBR that requires 24% growth rate over last fiscal year’s final collection of Rs2.254 trillion.

Missing of the target was the second major setback to the current fiscal year’s framework despite levying Rs234 billion additional taxes in the budget. Most of these new taxes are indirect in nature, which are considered regressive.

The growth in collection in December slowed down to just 6.6%.  The FBR pooled only Rs253 billion in the final month of the year.

The gross income tax collection amounted to Rs451 billion in first half of the fiscal year, showing only 8.7% growth over previous year’s collection. The income tax collection was just 36% of the total taxes. The gross sales tax collection stood at Rs532 billion, projecting a 6.1%-growth rate.

The collection on account of federal excise duties amounted to Rs71 billion, showing healthy rate of 22.4% while custom duties grew to Rs133 billion at a pace of 15.2%.

Published in The Express Tribune, January 1st,  2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

Facebook Conversations

Reader Comments (1)

  • Karachi 3
    Jan 1, 2015 - 9:03PM

    This shortfall is inspite of the fact that FBR has withheld refunds in excess of Rs 90 Billion
    FBR field units have become in-disciplined and aggressive and there is a taxpayer revolt in making
    Last date of filing corporate tax Returns was 31-12-2014 and only 13,500 tax returns were filed as compared to 24,500 corporate tax returns filed last year. This is primarily due to the diffculties in new efiling software IRIS introduced by FBR software unit PRAL.Someone should investigate the mess PRAL has created


More in Business