FBR falls Rs356 billion short of five-month tax target amid IMF pressure

The Federal Board of Revenue (FBR) has fallen short of its five-month tax collection target, missing by Rs356 billion, with provisional collections standing at Rs4.28 trillion against the target of Rs4.64 trillion as of November 30. 

This marks a growth rate of less than 23%, far below the required 40% to meet the annual target of nearly Rs13 trillion.

For November alone, the FBR missed its target of Rs1.003 trillion by Rs166 billion, collecting Rs837 billion, despite withholding Rs35 billion in legitimate taxpayer refunds. This is the fourth monthly shortfall in five months.

The revenue shortfall comes amid record tax measures, including Rs1.5 trillion in new taxes targeting the salaried class and corporate sector, as required under the International Monetary Fund (IMF) program. 

However, the IMF has raised concerns over declining indirect tax collections, including sales tax, federal excise duty, and customs duty, which fell short despite increased rates on essential items such as milk, vegetables, and medical tests.

While income tax collections exceeded targets by Rs190 billion, totaling Rs1.983 trillion, indirect taxes lagged. Sales tax collections stood at Rs1.546 trillion, falling Rs310 billion short of the target despite a 23% year-on-year increase. 

Federal excise duty collections rose to Rs277 billion but were still Rs100 billion below expectations, while customs duties reached Rs473 billion, missing by Rs137 billion.

Despite appointing Rashid Langrial as FBR chairman and introducing a Rs32.5 billion incentive package for tax officials, including new vehicles and additional salaries, the tax authority’s performance remains under scrutiny.

The IMF will review December’s tax collection data to decide whether a mini-budget will be required. Potential measures could include additional taxes on sectors like fertilizers, imports, and contractors.