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Thursday, February 15, 2024

Pakistan’s revenue collection exceeds its own target by 23pc

Latest data from the Federal Bureau of Revenue shows that the revenue collection for the first two months of Fiscal year 2021 exceeded collection target by Rs159 billion. However, some might argue that it is alarming that the 55 per cent of the total revenue was collected at import stage.

Prime Minister of Pakistan Imran Khan took to Twitter on Wednesday to announce that the Federal Bureau of Revenue collected Rs850 billion during July and August 2021.

Khan claimed that this exceeded its own target by 23 per cent, registering year-on-year growth in collection by 51 per cent.

Prime minister said that if this collection rate continues, the target of Rs5,829 billion will be easily achieved.

This announcement by the prime minister coincided with the announcement by newly appointed chairman of the revenue authority Dr. Ashfaq Ahmed, who on Tuesday declared that the revenue collection was up in the month of August saw a 45pc increase YoY from August 2020.

He revealed that the revenue collection for the month of August reached Rs434 billion, exceeding the target by Rs85bn.

For the first two months of FY22, the total revenue collection was Rs850 billion, while the target for the same months was set at Rs690 billion, showing that the target was exceeded by Rs159 billion.

Read more: What’s harming Pakistan’s tax revenue collection?

Similarly, when compared against the same months of last year, the revenue collection was up by Rs247 billion in July and August 2021.

It is worth mentioning however, that the 55% of the total revenues or Rs458 billion were collected at the import stage, which is also becoming a reason for increasing prices of various commodities.

Moreover, the revenue authority collected Rs595 billion or 70 per cent of the taxes in from of indirect taxation.

Talking about taxing imports FBR Chairman Dr. Ashfaq Ahmed said that the withholding of taxes at the import stage is the deliberate choice of the parliament, which has its own advantages.

He added that this import stage collection was increasing because of high imports of food items, machinery, and raw materials. He termed this as evidence of economic recovery.

Read more: FBR crosses Rs4 trillion revenue collection for the first time in May 2021!

It is worth mentioning that the Imran Khan and his allies have been critical of reliance of import side taxation making up for high percentage of total revenue collection.

On the other hand, the direct taxation under income tax made up for Rs254 billion in August, up 29 per cent YoY, and Rs46 billion higher than the set target.

Still, the share of income tax fell to a low of 30 per cent of the total collection, against 38 per cent when the incumbent government came into power.

Dr. Ashfaq Ahmed Presser

During his press conference Dr. Ahmed said, “The political environment remained good and the FBR had been given full space to apply our laws irrespective of whether someone was powerful or not,” while explaining reasons behind the increased tax collection.

He also remained optimistic about achieving the target of Rs5,829 billion saying that the economy has picked up momentum and will help achieve the revenue target.

FBR chairman elaborated that his focus would be on automation, facilitation of taxpayers, simplification of tax laws, improving tax enforcement and taking measures of ease of doing business.

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One of the major priorities he highlighted was the upgradation of information technology equipment would be under a World Bank-funded project.

He was supported by the FBR IT member who said biddings were in final stage for the purchase of the equipment.

Talking about the repatriation of non-resident Pakistanis’ assets, Dr Ahmed said it was not the mandate of the FBR to repatriate assets of overseas Pakistanis. He said the FBR could only tax untaxed amount of the people who had not declared their foreign assets in their returns.

Asked about the taxing of foreign assets of Pakistani citizens, the chairman said in the first two years of the incumbent government, Pakistan received data about the assets of Pakistanis abroad under the Organization for Economic Cooperation and Development’s (OECD) tax convention.

He said that all the people had whitened their untaxed money through the tax amnesty scheme announced by the incumbent government, and the FBR is only an executing body that acts on government’s decisions.

Read more: Aqeel Karim Dhedhi: Investing heart, mind, and soul into Pakistan

In the same presser, member customs Tariq Huda said tangible progress was made in the areas of anti-smuggling measures, which yielded the desired results. He said steps were taken for controlling currency smuggling in the country.

The FBR chairman said anti-smuggling drive would continue in the current fiscal year, and as a result, regular imports of smuggling-prone items would increase.