ISLAMABAD: Crossing the psychological barrier of FBR’s net tax collection indicates that the economic activities have started picking up. The FBR had agreed with the IMF to achieve a tax collection target of Rs969 billion for the first quarter of the current fiscal year.
There was increasing apprehension that if the FBR failed to deliver on this front then the Fund staff might come up with a prescription for taking additional revenue measures in the shape of introducing a “mini budget” for resumption of stalled IMF programme.
The incumbent Chairman FBR, Javed Ghani, had been given acting charge for three months. With the performance of netting Rs1004 billion revenue collection, the FBR has set the stage to demonstrate its ability that it could achieve the desired tax collection target of Rs4,963 billion for the whole financial year 2020-21.
The revenue measures taken in last two years had not been not fully materialised but now the FBR is taking steps in that direction that resulted into yielding more tax revenues. The first half year target was envisaged on lower side as the the FBR was looking for around over Rs2 trillion in first six months (July-Dec) period of the current fiscal year.
The real test of the tax machinery will be done in second half (Jan-June) period when the FBR will have to collect almost Rs3 trillion for achieving the desired target for whole financial year. The resumption of economic activities is good omen for the national economy but the economic managers will have to build up strong economic fundamentals to continue the growth momentum on sustained basis because without boosting up dwindling growth rate the dream of economic revival could not be achieved on sustained basis.
Pakistan’s tax to GDP ratio remained stagnant in the range of 9 to 10 percent in the last one decade while all other regional economies demonstrated this ratio in the range of 14 to 15 percent, so Pakistan will have to achieve tax to GDP ratio in the double digit in order to generate the desired resources for investing for bringing betterment in the life of common citizen.