Pakistan has asked the IMF for a cut in FBR’s collection target from Rs5.9 trillion to Rs5.5 trillion for the upcoming budget, citing the third wave of the coronavirus pandemic as a reason.
The IMF had given the FBR the tax collection target of Rs5,963 billion for the upcoming budget 2021-22 against a downward revised target of Rs4,691 billion for the outgoing fiscal year in its latest staff report released after completion of the second to fifth reviews under $6 billion Extended Fund Facility (EFF) for Pakistan.
But Pakistani authorities are arguing that there is a huge gap between the IMF’s envisaged target and potential of FBR to fix the next fiscal year’s target. “It will not be possible to abolish the GST exemptions related to agriculture and health because it will hike inflationary pressures and make the health sector expensive when the third wave of COVID-19 pandemic is gripping the country,”
FBR’s tax revenues could go up to Rs5,287.5 billion with nominal growth of 12% to 12.5% on the basis of revised tax collection of Rs4,700 billion for the outgoing fiscal year.
With an improved administration and effective enforcement, the FBR could maximum increase its collection up to Rs200 billion, so the FBR could collect Rs5.5 trillion.
The official said that FBR’s target of Rs5,963 for the upcoming budget is “too ambitious and cannot be materialized at all.”