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Friday, April 19, 2024

PM Khan applauds FBR’s effort as tax collection exceeds targets

The increasing collection at the import stage(custom duty) and growing reliance on indirect taxes remained the two distinctive features of the FBR’s revenue performance in the first 10 months of the current fiscal year. It has led to higher prices for the poor people of the economy.

Imran Khan on Saturday went to Twitter to applaud the FBR’s efforts on achieving revenue growth of 57 percent in April 2021.

The Prime Minister of Pakistan said, “I commend FBR efforts on achieving growth of 57% in April 2021 with collections recorded at Rs384 bn compared to Rs240 bn in April 2020.”

According to the premier, the Year-on-Year growth in revenue has been 14pc, compared to April 2020.  He referred to the increase saying that the rise shows the government’s macroeconomic policies have led to broad-based economic revival.

As per details, FBR now has to collect Rs911 billion in the remaining two months of the fiscal year 2020-21 after it revised its revenue target to Rs 4,693 billion for the fiscal year. That would require a much higher monthly average than the celebrated Rs384 billion.

Read More: PM asks EAC to propose relief measures instead of imposing taxes

The initial target set by the government was Rs4,963 billion for the current fiscal year, however, the International Monetary Fund (IMF) has allowed the government to revise it down to Rs4,693 billion during its review held in March.

However, the concerning part is the fact that the majority, that is, 64 percent of the total revenue came from indirect taxes.

The FBR collected Rs3.78 trillion in the first 10 months of the current fiscal year as against Rs3.32 trillion in the same period of last fiscal year, registering a growth rate of nearly 14%, according to the provisional results.

The collection agency managed to exceed targets at sales tax and customs duty, however according to the Tribune income tax and federal excise duty targets were not met.

According to experts, indirect taxes are easy yet regressive sources of taxation. Pakistan has been focusing on indirect taxation targets, supported by the increased prices in the economy. The burden of such taxes falls upon the poor whose real income remains the same and the higher GST and other indirect taxes impact their standard of living.

Tribune reports that PM Khan has apparently taken notice of the existence of indirect taxes and has asked the revenue authority to reduce dependence on indirect taxation.

Read More: IMF program wants Pakistan to increase taxes despite Covid-19

On the other hand, the unmet income tax means that more and more people are still not under the country’s financial net, and the informal sector still continues to evade taxation.