Five months into the fiscal year 2020-21 (i.e. FY21), there are mixed signals on FBR’s tax collection. While there is good news that the revenue board has achieved the tax collection target for the first five months of FY21, the bad news is that the growth in tax collection is a meager 3.8% even though it was supposed to be in the vicinity of 25%. Remember the tax target for the full fiscal year is Rs4960 billion while the collection in the previous fiscal year stood at Rs3967 billion — the difference of which comes to something around Rs993 billion or around 25%. In number terms, the tax collection in the first five months of the ongoing fiscal year rose by Rs65 billion to Rs1688 billion — from Rs1623 billion in the corresponding period of the previous fiscal year.
Managing a growth of 25% in revenue collection is no mean feat — more so because of a significant slowdown in economic activity due to the reigning Covid-19 pandemic. But even if there had been no coronavirus and it had been business as usual, the incumbent government’s economic stabilisation policy — which has led to a fall in revenues due to compressed imports and curtailed development activity — would have been enough an impediment to achieving an intended 25% growth in tax collection. The SBP has offered stimulus packages to businessmen, but that promises little hope in the context of a full-fledged revival of commercial activity across the country.
PM’s special assistant on revenue Dr Waqar Masood does not sound too determined either. During a recent television interview, he said that the Rs4960 billion tax collection target was based on the assumption that the coronavirus would have gone or at least subsided with the start of the new tax year, paving the way for a resumption in normal commercial activity. Seven months is a big time. We may well see a better performing tax machinery. As of now though, a minibudget looms on the horizon.
Published in The Express Tribune, December 8th, 2020.