The elusive Rs 5.5 trillion tax collection target

'Sanity' seems to have prevailed with the dawning of realization among our policymakers that the Rs 5.5 trillion tax collection target is impossible to achieve. How could the government expect to generate higher tax collection in an economic environment which is characterised by, among other things, lower growth and compressed imports?

According to a Business Recorder news report, "While briefing the Senate Standing Committee on Finance chaired by Farooq H Naek, Zaidi stated that there is shortfall of Rs 200 billion in tax collection during the five months of the current fiscal year and attributed it to over $4 billion import compression and stated that tax collected on imports constitutes to 50 percent of tax collection. Total tax collection during the first five months of the current fiscal year (up to November 30) was recorded at Rs 1,618 billion against the indicative target of Rs 5.5 trillion for the entire fiscal year."

The chairman FBR's remarks constitute a clear admission on his part that a downward revision of the tax collection target for financial year 2019-20 is on the cards. This development clearly shows that country's economic policymaking has been hamstrung by lack of required planning or forethought.