Revenue target further slashed

The government has further slashed revenue target for the current fiscal to Rs 1580, Rs 87 billion less than original projection of Rs 1667 billion, said a senior official of the Finance ministry. It is second downward revision in current fiscal year revenue target. For the first time, revenue target was reduced from Rs 1667 billion to Rs 1604 billion in February and on its basis the fiscal deficit was estimated at 4.9 percent.
Now after a couple of weeks, revenue target has again been reduced to Rs 1585 billion. Sources said with Rs 87 billion less than original estimates of revenue collection, fiscal deficit is likely to hover around 5.3 percent. The official said the reduced revenue target was shared with the International Monetary Fund (IMF) team last week which took it as a step towards widening fiscal deficit to over 5.3 percent of GDP.
The government is in disarray over meeting the revenue target as it could collect only Rs 828 billion in the first 8 months and tax authorities do not find any answer to a question as to how they are going to get even a reduced target of Rs 1580 billion.
The official said "IMF team that held talks with Pakistani authorities from March 1 to 11, was more concerned over Pakistan''s indifference towards structural reforms for putting in place a sound economic system rather than focusing on figures like what would be Pakistan''s revenue collection or at what level its fiscal deficit ends up by June 30". These issues will come up once IMF''s mission comes sometimes in May for review of Pakistan''s economy, he added.
The Federal Board of Revenue (FBR) officials are apparently not in a position to answer as to what allured them to take responsibility of achieving huge revenue target of Rs 1667 billion for 2010-11, when nothing extraordinary was expected to happen for a turnaround in the economy.
The tax authorities have been terming delay in implementation of reformed general sales tax (RGST) and flood surcharge as major factors in low revenue collection. As a last ditch effort, FBR is persuading the top level authorities to impose flood surcharge and other corrective measures for generating more revenue in the last three months of the current fiscal year. The move will yield Rs 40 billion to Rs 45 billion revenue for FBR by June 30.