ISLAMABAD, Jan 1: Pakistan’s tax authority, the Federal Bureau of Revenue fell significantly short of its revenue commitments by the end of December 31, collecting a total PKR 6,154 billion ($22.2bn), against a budget of PKR 6,490 billion ($23.4bn), failing to meet its target laid out under the IMF’s programme by a shortfall of PKR 336 billion ($1.21bn), ) during the first half of the current fiscal year, covering July to December, as per govt data.
Earlier internal projections had warned that the shortfall could widen to between PKR 400 billion and PKR 500 billion ($1.44bn-$1.80bn), which had led the FBR to reduce its annual tax collection target, from its initial full-year goal of collecting PKR 14,130 billion ($50.9bn), as approved by parliament, to PKR 13,979 billion ($50.3bn) in line with the projections, and its understandings reached with the IMF. That revised target, however, has yet to be ratified by the parliament.
December, traditionally seen as a strong month for tax receipts, also saw a significant shortfall, with the tax authority’s collections amounting to PKR 1,421 billion ($5.11bn) against a fixed monthly target of PKR 446 billion ($5.20bn), failing to reach its goal by a margin of over PKR 25 billion ($90m).
Speaking to The News International, FBR Chairman Rashid Mahmood Langrial, late Wednesday said that the final figures for the half-year might increase by a few billion PKR once all adjustments were made, slightly narrowing the overall shortfall, adding that the net collection could improve marginally as late payments were accounted for.
A significant portion of income tax was collected yesterday, prompting questions about the extent to which advance payments by the corporate sector were used to bolster end-month figures.
FBR officials rejected suggestions of any unusual reliance on such payments, noting that a total PKR 305 billion ($1.10bn) was deposited by corporates on the last day of December, compared to the PKR 278 billion ($1.00bn) deposited in the final days of the previous fiscal year.
An IMF team is scheduled to conduct a virtual review of the FBR’s tax performance next week. Fund officials have already indicated that if revenue slippages continue to widen, the government and the tax authority may be required to introduce contingency tax measures to stay on track with programme targets.
Officials noted, that if the IMF cited satisfaction with the overall fiscal stance despite the revenue gap, Islamabad could then aim to offset the shortfall through proportional cuts in expenditure to preserve agreed primary balance and fiscal deficit ceilings.
Breakdown figures for December show that the FBR collected PKR 1,421.1 billion ($5.11bn) after issuing refunds worth PKR 38 billion ($137m).
This included PKR 828 billion ($2.98bn) in income tax, PKR 434.3 billion ($1.56bn) in sales tax, PKR 72.6 billion ($261m) in federal excise duty and PKR 123.5 billion ($445m) in customs duty.
The revenue performance will be a key focus of discussions with the IMF, as Pakistan seeks to keep its stabilisation programme on course amid slowing growth and tight fiscal conditions.
(UNI)
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