The Federal Board of Revenue after facing a shortfall of over Rs100b, has set the tax collection target for the 2nd quarter of the current FY 2019-20 at Rs1,295.99bn
ISLAMABAD (News Desk): The Federal Board of Revenue, after facing a revenue shortfall of over Rs100 billion, has set the tax collection target for the second quarter (October to December) of the current fiscal year 2019-20 at Rs1,295.99 billion while the target for the current month of October has been set at Rs376.126 billion. According to the documents available with The Express Tribune, the FBR in a bid to achieve the tax collection target for the month of October has set the target of income tax collection in direct taxes at Rs131.33 billion while the target of sales tax collection in indirect taxes has been set at Rs149.58 billion. The federal excise duty collection target has been set at Rs25.124 billion while customs duties at Rs70.10 billion. To achieve the three-month (October to December) tax collection target of Rs1,295.99 billion, in direct tax collection the income tax collection target has been set at Rs491.87 billion while the sales tax collection target in indirect taxes has been set at Rs499.89 billion. The federal excise duty collection has been kept at Rs84.438 billion and the customs duties collection at Rs219.80 billion.
It must be made clear that during the first quarter of the current financial year from July to September 2019, the interim shortfall of the FBR increased to over Rs139 billion while the last month of September saw an interim shortfall of more than Rs40 billion. In the first quarter of the current fiscal year, Rs30 billion tax refunds were paid to the taxpayers. Sources said owing to the International Monetary Fund’s conditions not being met by the FBR, difficulties might increase because the tax collection targets set with the IMF for the first quarter of the current financial year were not achieved and refunds worth Rs75 billion to the taxpayers were not released. Sources said in case of exemption not being given by the IMF in the first economic examination, more steps would be taken to collet revenues otherwise deduction would have to be made in the billions of rupees allocated for development expenditures.
According to statistics and figures, the FBR collected interim taxes amounting to Rs963 billion during the current financial year’s first quarter (July to September), which was though 15% more than the tax collected during the same period of previous financial year 2018-19, but collection of Rs108 billion was quite less for the first quarter against the target of Rs1,071 billion. Sources said the FBR would have to meet the revenue shortfall in the coming months or else the IMF would increase pressure to collect additional revenue.
Earlier, The World Bank has cut Pakistan’s economic growth forecast for the next two years and also projected that Prime Minister Imran Khan’s government would miss inflation, public debt, and fiscal deficit reduction targets. The findings that the WB reported in its annual flagship report, the South Asia Economic Focus Fall 2019, have underpinned challenges that the government will face at least till the end of the third year in power. The WB also said Pakistan’s economic behaviour is different than all the other South Asian nations. Despite significant devaluation, the WB still sees the Pakistan rupee overvalued by the end of September by approximately 4.8%. It has shown the Real Effective Exchange Rate at 104.8 – an insertion that independent economists do not accept who currently see the rupee undervalued after significant devaluation by the PTI government.
The report, released from Washington on Sunday, predicted that for the first time since 2001 Pakistan’s progress towards poverty reduction would ‘stall’ due to macroeconomic adjustments initiated under the $6 billion 39-month International Monetary Fund (IMF) programme. Prime Minister Imran has already opened a public ‘Langar’ scheme to help poor people get a two-time free meal. The bad news to miss key macroeconomic targets, except current account deficit, came a day after the PM’s Finance Adviser Dr Abdul Hafeez Shaikh announced that the government brought the trade and fiscal deficits under control during the first quarter of this fiscal year. Pakistan, like many South Asian countries, is growing half of its potential¬ and in the fiscal year 2019-20, it would grow at a rate of only 2.4%, according to the WB report.
The forecast is in line with the Ministry of Finance and the IMF projections. “In Pakistan, growth is projected to deteriorate further to 2.4% this fiscal year, as monetary policy remains tight, and the planned fiscal consolidation will compress domestic demand,” said the WB. It added that economic growth is expected to recover slowly, to just 3% in the next fiscal year 2020-21, as macroeconomic conditions improve and external demand picks up on the back of structural reforms and increased competitiveness. The WB said the IMF programme is expected to help growth recover from the fiscal year 2021-22 onwards.
But this recovery is conditional to relatively stable global markets, a decline in international oil prices and reduced political and security risks. In April, the WB had predicted Pakistan’s economy to grow by 2.7% in this fiscal year and 3.9% in the next fiscal year.