ISLAMABAD: The Federal Board of Revenue (FBR) is set to miss its annual budgetary collection target by almost Rs522 billion, or 8.83 per cent, for the outgoing fiscal year (FY23) owing to a steep decline in dutiable imports as well as poor general sales tax performance, showed provisional data.
The revenue collection reached Rs7.118tr until June 27 as against Rs7.640tr projected for the entire FY23. “We are expecting more revenue in the next three days despite Eid holidays”, a senior tax official told Dawn on Tuesday.
The government has revised the FBR’s collection target to Rs7.2tr from the budgetary projection of Rs7.640tr in a bid to adjust the shortfalls recorded in the previous months.
The revised target, according to the official, will now be easily achieved. “We have also shared the revised figure with the IMF,” the official said, adding all projections of next fiscal year tax collection were made on the revised figures.
Govt revises budgetary projection to Rs7.2tr from Rs7.64tr for FY23
Finance Minister Ishaq Dar also tweeted that the FBR has achieved a historical revenue collection. In the next three days, according to the tax official the FBR will receive tax from online transactions and domestic sales tax on consumer items.
The government has projected a revenue collection target of Rs9.415tr for FY24 as against the revised collection of Rs7.2tr in FY23, showing an increase of Rs2.219tr or 30pc.
The sum of new tax measures for the next fiscal year now stands at Rs948bn. The revenue measures announced in the budget speech stood at Rs223bn, in addition to all taxes worth Rs500bn introduced in a mini-budget in mid-February. At the winding of the budget speech on June 24, another Rs215bn worth of new taxes were imposed.
The government hopes to achieve a 30pc higher revenue target for the next fiscal year based on the projected economic growth of 3.5pc, average inflation of 21pc and some revenue measures. The autonomous growth in revenue — to come from GDP growth and inflation — is projected at Rs1.76tr in 2023-24.
In the outgoing fiscal year, all revenue measures including the mini-budget in February did not help the tax authorities to achieve the collection target. However, the FBR performance also remains below expectations despite several revenue measures.
The impact of over 36pc inflation, besides the highest-ever depreciation of the rupee, is also not reflected in the revenue collection.
The tax collection at the import stage fell drastically in FY23 compared with the projected target for the same period. The decline was mainly attributed to a fall in imports of high-duty items like automobiles, electronic appliances, ceramics and other non-essential products.
The focus of the government is only to allow the import of energy, food and pharmaceutical products in a bid to save foreign exchange of the country. This is clear from the fact that the customs collection also fell drastically in the outgoing fiscal year.
The data showed that direct tax collection remained on target in FY23. However, the income tax refunds remained negligible in the current fiscal year.
The domestic sales tax collection did not perform well despite unprecedented inflation and increased GST rate to 18pc from 17pc. The sales tax collection fell short of the target in FY23. The federal excise duty also fell short of the target FY23 despite the increase in cigarette rates and expansion of excise duty to other sectors.
The exporters are also complaining about delays in their due refunds.
Published in Dawn, June 28th, 2023
