Islamabad:
The federal government has lost the annual fiscal objective of almost RS13 billion by a record margin of around RS1.2 billion, since the authorities did not increase tax revenues to 10.6% of the size of the economy, despite putting an additional load unprecedented for people.
The collection, however, was RS2.43 billion or 26% higher than the previous year, showing that independent analysts corrected that the government had established an incorrect objective in the first place that was impossible to achieve without a mini budget.
The Federal Income Board (FBR) provisionally collected RS11.73 billion in prosecutor 2024-25, at the end of the objective in approximately RS1.2 billion, according to its provisional figures, on Monday, the last day of the financial year.
The Federal Government had granted a commitment to the International Monetary Fund (IMF) that it would increase the relationship imposed to GDP to 10.6% in fiscal year 2024-25. However, the relationship remained at just over 10.2% of GDP, according to the provisional figures compiled until Monday night.
The deficit of approximately RS1.2 billion is not preceded because the Government had imposed a registration of RS1.3 billion in additional taxes in the budget. This follows the fiscal year 2019-20, when the economy suffered greatly due to COVID-19 and, as a result, the objective was mounted by a margin of RS1.6 billion.
After assuming the office in August last year, the president of FBR, rashid langial, had said that the collection through additional measures may not be more than RS650 billion due to the deceleration of the economy and that inflation falls to a single digit.
In July last year, the former president of FBR, Amjad Zubair Tiwana, had said that, regardless of the number of efforts that the FBR would put, the annual collection could not exceed 11.8 billion RS1. His prophecy was demonstrated correct.
The government overloaded the salaried class and taxed almost all essential consumer goods, including packaged milk, to collect RS12.97 billion taxes.
The FBR had to pursue an unrealistic fiscal objective together with a slowdown economy and the inflation rate of the fall: the three key factors that have eclipsed the 26% increase in the collection of the slow economy.
The Minister of Finance, Muhammad Aurengzeb, had promised to achieve the objective of more than RS12.9 billion without the need for the mini budget. He could not succeed, although the government increased the oil tax rates to register RS78 per liter to compensate for the impact of the fiscal deficit on the objective of the surplus of the primary budget. At the beginning of the fiscal year, the oil collection rate was RS60 per liter in high speed gasoline and diesel.
The huge deficit is also much more than the government had committed to the IMF just in March of this year, when the lender lowered the objective at RS640 billion throughout the fiscal year. Subsequently, the Government also reviewed the objective at RS11.9 billion in June, which was also lost.
Prime Minister Shehbaz Sharif has focused personally on FBR affairs and has tried to introduce many new initiatives, including digital monitoring of the economy and focusing on sectors prone to tax evasion.
The president of FBR, Langial, also obtained more tax incentives for his workforce, including the delivery of new 1,300 cc cars and additional monthly salaries from one to four.
The Federal Government approved two RS55 billion projects for the FBR to strengthen its workforce, establish new personalized publications along the Indo River to stop smuggling and update the digital infrastructure. The tax authorities said that the results of all these initiatives would be visible in the new fiscal year.
Langial also promised to take affidavits of the main financial officials of the companies to verify under the declaration of sales and raise more income from companies and people, including the richest people of Pakistan. However, all these initiatives did not help reach the goal.
In addition, the Government could not fulfill the commitment to collect RS50 billion in taxes on retailers under the Tajir Dost scheme. The collection could not even reach RS50 million.
For the new fiscal year, the Government has established the tax objective of RS14.13 billion trillion taxes for the FBR, which requires a 20% growth in collection during the income of the last fiscal year.
For the month of June, the objective of the FBR was RS1.67 billion. However, despite making advances and slowing down reimbursements, it could collect RS1,49 billion, being under the objective in approximately RS180 billion.
The IMF forced the country to impose new taxes, mainly loading the wage class and collecting taxes on almost all consumable goods, including medical tests, stationery, vegetables and child milk.
Tax collection rupture
The FBR lost its objectives for the sales tax, the Federal Tax and the duty of Customs, but again exceeded the objective of the Income Tax in the back of the excessive load of the salaried class.
According to the details, the collection of income taxes amounted to almost RS5.8 billion, RS340 billion more than the objective. It was also RS1.25 billion more than the last year. The load was shared by the wage class and the corporate sector, since the retailers and the owners still remained without taxes.
The collection of sales taxes stood at RS3.9 billion, almost RS1.03 billion less than the objective of more than 4.9 billion. The sales tax remained the most difficult area for the FBR and one of the reasons for low collection was less than an estimated growth in large industries. The government had immensely increased the burden of sales tax in the budget. The collection was RS812 billion more than last year.
The FBR collected RS767 billion in the Federal Special Tax, RS187 billion less than the objective. But it was RS190 billion higher than last year. The government did not save homes, lubricants, fruit juices, cement, sugar, etc. to impose the special tax in the last budget. However, he failed miserably to achieve the goal.
The collection of customs services stood at RS1.28 billion, RS315 billion below the target. The collection was beaten by the lower import volumes than the projected ones. They were RS173 billion more than last year. The FBR paid RS493 billion for tax reimbursements, which were RS13 billion more than the previous year.
