ISLAMABAD: Tax experts have raised the question of whether the differences between the caretaker Finance Minister and Federal Board of Revenue (FBR) on the issue of the Board’s restructuring has anything to do with the shortfall in tax collection during the last two months.
A leading tax expert told Business Recorder that there is speculation within the FBR that revenue collections may improve with the appointment of a new Finance Minister.
In January 2024, the Inland Revenue Service (IRS) approached the Election Commission of Pakistan, urging it to prevent the interim government from what it deems an “illegal and unconstitutional” restructuring of the FBR.
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Under the restructuring plan, there will be a Federal Tax Policy Board, an Oversight Board, a Federal Board of Customs, and a Federal Board of Inland Revenue.
FBR has not been able to met monthly revenue collection target for the second consecutive month during 2023-24, which may force the government to announce a mini-budget in case target again misses in March 2024.
Sources informed that the FBR will have to take contingency measures in case the FBR misses target for the month of March 2024. This would require generation of additional Rs18 billion monthly revenue throughout the Fiscal Year 2023-24 to overcome shortfall. The persistent revenue shortfall in monthly revenue collection of the Federal Board of Revenue (FBR) may force the new government to enforce contingency measures to generate additional revenue of Rs18 billion per month during 2023-24.
Tax experts disclosed that February’s collections amounted to Rs681 billion, significantly below the targeted Rs714 billion, resulting in Rs33 billion shortfall. January witnessed a shortfall of Rs9 billion, cumulatively amounting to Rs42 billion losses over two months. The question arises whether this financial discrepancy could be attributed to FBR’s resistance against the proposed reforms aimed at enhancing the efficiency of the tax machinery? The persistent shortfall in tax collection may prompt the authorities to take new measures as agreed with the IMF.
Copyright Business Recorder, 2024
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