The Federal Board of Revenue (FBR) announced on Friday that it collected Rs9.3 trillion during the fiscal year 2023-24, missing its original target of Rs9.4 trillion by Rs100 billion. Despite this shortfall, the FBR claims a minor victory, stating it exceeded the revised target of Rs9,252 billion by Rs54 billion, with total collections reaching Rs9,306 billion.
Dr. Ikramul Haq, a tax expert, criticized the downward revision of the FBR’s target from Rs9.4 trillion to Rs9.252 trillion, calling the lack of transparency and explanation for this change “shocking.” He pointed out that the FBR’s claimed growth figures were misleading. According to Dr. Haq, while there was a nominal growth of 27%, the real growth was merely 3%, not the 30% touted by the FBR.
Prime Minister Shehbaz Sharif has consistently stated that Pakistan has the potential to collect revenues exceeding Rs24 trillion annually, far surpassing the current target of Rs9.4 trillion. He attributes the revenue shortfall to corruption, inefficiency, and negligence, suggesting that a substantial amount of potential revenue is lost each year.
Dr. Haq highlighted the FBR’s historical failure to meet its original targets, which has led to increased tax burdens on the general public. He pointed out that the fixation on unachievable targets and excessive tax expenditures, which amounted to Rs3.879 trillion (36.4% of total collection), exacerbates the problem. He called for the Prime Minister and Finance Minister to address erratic taxation and unjustified tax concessions granted to elites.
The Finance Act 2024, passed by Parliament, introduces measures that Dr. Haq believes will overtax an already struggling economy. He noted that the incidence of taxation has shifted disproportionately to the salaried class, which is already suffering from hyperinflation. According to him, the Act fails to address the need to raise revenues by lowering tax rates and broadening the tax base to tap into the actual potential of Rs32 trillion.
A tax expert warned that the shortfall in 2023-24 would likely lead to an upward adjustment of the target for 2024-25. Despite new taxation measures amounting to Rs1.761 trillion, which came into effect on July 1, 2024, the expert noted that corruption in the FBR’s field formations, particularly in refund payments, persists. This reflects a lack of effective enforcement and monitoring by the FBR’s Inland Revenue (IR) Operations Wing.
One notable incident involved senior IR officials in Lahore who were suspended due to issues with refund payments. The matter is currently under investigation by the Federal Investigation Agency (FIA), highlighting ongoing challenges within the FBR.
The government has implemented new taxation measures through the Finance Act 2024, which include increased tax burdens on the salaried class and heavy indirect taxation on the general public. This includes the imposition of sales tax on essential items such as stationery, dairy products, and poultry feed.
