The previous government of Pakistan Tehreek-e-Insaf (PTI) gave away a record Rs1.76 trillion in tax exemptions to the affluent and foreign investors during the outgoing fiscal year, taking the total cost of such exemptions in four years to a whopping Rs5.2 trillion.
The 2021-22 revealed that there was a 34%, or Rs443 billion, surge in the cost of tax exemptions in just one year despite the fact that the PTI government also withdrew around Rs300 billion in exemptions in January this year. It was the highest amount of concessions given in any fiscal year.
Cumulatively, the previous government gave Rs5.2 trillion in tax exemptions during four years, which was equal to 87% of the estimated tax collection by the Federal Board of Revenue (FBR) in the outgoing fiscal year.
The last government also provided tax exemptions to the military’s commercial ventures.
“The tax expenditure for fiscal year 2022 has been estimated at Rs1.757 trillion” on account of income tax, sales tax and customs duty concessions, the Economic Survey, which Finance Minister Miftah Ismail presented on Thursday, showed.
The government may unveil a Rs9.45 trillion budget, which will be financed by taking Rs4.5 trillion in new debt.
The withdrawal of tax exemptions has remained part of every programme that Pakistan signed with the International Monetary Fund (IMF). Still, every successive government has not only managed to protect the affluent class but also added more names to the list of beneficiaries.
The FBR is expected to collect Rs6 trillion in taxes in the current fiscal year and assuming that the government can recover the entire Rs1.76 trillion, the tax collection will reach Rs7.76 trillion. This would have reduced the borrowing requirement by the same amount.