The Rs7.25 trillion tax collection target will be Rs1.15 trillion, or 19%, higher than this year’s revised target of Rs6.1 trillion. The IMF had asked for taking more tax measures to bridge the gap, which was not feasible in the present political circumstances. Sources said that the IMF was asking Pakistan for the Rs7.25 trillion tax target in addition to fulfilling the commitments made by the previous government of Pakistan Tehreek-e-Insaf to withdraw the tax exemptions and revise the tax slabs for the salaried individuals. The FBR’s performance has remained largely dependent on imports that contributed nearly 52% to the total tax collection, which camouflaged the weaknesses in the domestic sales tax collection that remained negative. Unlike the economic theories that talk about increase in tax collection proportionate to the nominal GDP growth rate, the FBRs’ performance in the last 10 months suggested that its sales tax collection at the domestic stage fell by 10% despite average inflation rate of 11%.

Source: The Express Tribune May 11, 2022 07:17 UTC