Pakistan tax receipts rise at less than required pace

ISLAMABAD, July 30 (Express Tribune): The Federal Board of Revenue (FBR) exceeded the tax target and collected over Rs454 billion in July on the back of a healthy growth in income tax receipts whose share in total collection improved due to the direct taxes imposed in budget.
However, the increase in collection was slightly over 9 per cent, which was significantly lower than the pace that the tax authorities ought to achieve to meet the annual target of Rs7.470 trillion.
During July, the FBR provisionally collected Rs454 billion, up by Rs38 billion or 9 per cent, according to data compiled at the end of last working day of the month. The collection will marginally improve due to the clearance of goods at ports today (Saturday).
For July, the tax machinery had set a target of Rs443 billion, which was equal to 6 per cent of the annual target.
For the new fiscal year, the government has fixed the tax collection target at Rs7.470 trillion on the International Monetary Fund's (IMF) demand, which will require about 22 per cent growth. The target seems to be achievable given the high inflation rate.
In the last fiscal year, the FBR's performance remained largely dependent on imports that contributed 51 per cent to the total tax collection, which throughout the year camouflaged the weakness in the domestic sales tax collection that remained negative.
However, there were two positive developments in the outgoing month. The share of imports in the total tax collection dropped to 47.5 per cent due to the overall reduction in import bill.
Secondly, the share of income tax increased to 39 per cent, which was in line with the annual requirement.
In the FY23 budget, the government has imposed over Rs1 trillion in additional taxes on account of petroleum levy, income tax, sales tax and federal excise duty. It has slapped 1 per cent to 4 per cent super tax on companies for an unlimited period.
Prime Minister Shehbaz Sharif promised that the super tax would be imposed for only one year but he has now backtracked from the promise. But the 10 per cent super tax remains, for the time being, for one year only.
Provisional figures showed that the FBR collected Rs177 billion in income tax, up by Rs41 billion, or 30 per cent. The collection was equal to 39 per cent of the total taxes generated in July. The FBR exceeded the monthly income tax collection target by Rs20 billion.
A better performance by the Large Taxpayers Unit - Islamabad helped in exceeding the monthly income tax collection goal.
Out of Rs454 billion, the FBR collected Rs216 billion at the import stage on account of withholding taxes, sales tax on imports and customs duty.
Its share was around 47.5 per cent, as imports decreased massively due to various restrictions imposed by the State Bank of Pakistan and the federal government.