PTBP Web Desk
The Federal Board of Revenue (FBR) is currently grappling with the formidable challenge of reaching its tax collection target for November 2024, set at Rs1,003 billion. As of November 25, 2024, the revenue collected stands at just over Rs550 billion, indicating that the FBR has a steep climb to meet its monthly target without resorting to additional tax measures or a mini-budget.
The government has been clear in its policy not to introduce a mini-budget in the second quarter of the fiscal year 2024-25. This decision stems from the desire to avoid overburdening taxpayers and to maintain economic stability without abrupt fiscal adjustments. However, this approach places additional pressure on the FBR to optimize existing tax collection mechanisms rather than expanding the tax base or rates.
Issuing notices to non-filers is one such measure. The FBR plans to target high-net-worth individuals who have not filed their taxes. In the first phase, notices will be issued to 5,000 such individuals, aiming to recover an estimated Rs7 billion. This initiative is part of a broader enforcement strategy to ensure compliance without altering tax rates.
For October 2024, the FBR collected Rs877 billion against a target of Rs980 billion, resulting in a shortfall of Rs103 billion. This underscores the ongoing challenge in meeting monthly targets. Over the first four months of the fiscal year 2024-25, the total collection was Rs3,440 billion against a target of Rs3,636 billion, reflecting a cumulative shortfall of Rs196 billion.
The initial economic projections for GDP growth, inflation, import volumes, and growth in large-scale manufacturing have been revised. These changes necessitate adaptive measures from the FBR. There was an assumption that raising tax rates and enforcement actions would bring in an additional Rs320 billion. However, with the current economic climate, these measures have not met expectations, prompting the FBR to seek alternative revenue enhancement strategies.
Under contingency revenue measures, the government has agreed to increase the federal excise duty on aerated and sugary drinks and adjust withholding tax rates on imports, contracts, and services. These steps are expected to generate approximately Rs10.8 billion each month, with a total projected revenue impact of Rs97.2 billion for the remaining three quarters of the fiscal year.
The FBR is employing technological solutions like a dedicated dashboard for tracking non-filers, enhancing the efficiency of identifying and pursuing tax evasion. This tool aims to streamline the process of issuing notices and collecting dues, thereby reducing the administrative burden and improving compliance rates.
The challenges for the FBR are multifaceted, involving economic factors, public compliance, and administrative efficiency. Without the introduction of new taxes or rate hikes, the FBR’s task is monumental. The strategy hinges on meticulous enforcement, technological aid, and possibly, an optimistic economic recovery in the later quarters. The success or failure in meeting these targets will not only affect the fiscal health of Pakistan but also reflect on the government’s economic management capabilities during a challenging period.
