KARACHI – Federal Board of Revenue (FBR) has once again missed its revenue target, this time by staggering Rs864 billion, despite an aggressive round of taxation measures throughout the year. From rising withholding taxes to higher duties across multiple sectors, the public effort to “contribute more” has clearly not translated into meeting official expectations.
In the last fiscal year, the apex tax collection authority managed to collect Rs11.232 trillion against revised target of Rs12.01 trillion. Still, no cause for alarm. The government now needs Rs2.75 trillion in June alone, which translates to roughly Rs91.6 billion per day.
Overall growth in tax collection stands at about 10percent, conveniently below nominal growth of the economy. But details, as always, are optional when the fiscal story needs optimism.
In Income tax, Rs5.54 trillion were collected, and FBR still needs Rs261 billion. In Sales tax, Rs3.78 trillion was collected, but short by Rs457 billion. For Excise duty, Rs745 billion was collected, slightly below target but up 15% but growth is growth, right?
In Customs duty, Pakistan amassed Rs1.18 trillion, missing target by Rs116 billion despite rising imports; imports grew, but revenue took a nap. Refunds, however, are doing great, Rs551 billion and counting, because nothing says fiscal discipline like paying money back while asking for more.
To fix the gap, policymakers are reportedly preparing a new menu of “revenue-enhancing adjustments,” which roughly translates to: let’s see what’s still untaxed and fix that immediately.
Higher withholding taxes on imports, because imported inflation needed company, and Revised income tax rates for wholesalers as electricity bills will now double as tax notices. There will be Increased turnover taxes on businesses, because slabs are clearly too “relaxed”.
Sales tax on fast-moving goods at full market price, and possible 20% windfall tax on oil companies as profits were getting too confident anyway. And of course, IMF compliance is involved, because nothing sharpens tax creativity like supervision by global lenders.
Small traders might be spared the full experience, with a proposed 1% tax on annual turnover up to Rs200 million. A symbolic gesture, really, just enough to say everyone is participating in the national contribution drive.
Owners of plug-in hybrid vehicles should enjoy them while they last. The current reduced tax rates, 8.5% and 12.75%, are set to end by June 2026. After that, the government is considering the standard 18% sales tax. Because if there’s one thing Pakistan’s fiscal situation demands, it’s making fuel-efficient cars slightly less affordable.
The shortfall is being quietly managed through higher petroleum levies and reduced development spending, essentially shifting the burden while keeping the headline numbers respectable. So yes, the deficit is large, the targets are missed, and the pressure is rising. But rest assured, the solution pipeline is strong, innovative, and, most importantly paid for by the usual suspects.
FBR offices to remain open on Friday to achieve tax collection target
