The Federal Board of Revenue (FBR) has failed to meet its five-month tax collection target, missing Rs356 billion, with provisional collections standing at Rs4.28 trillion against the target of Rs4.64 trillion as of November 30.
This represents a growth rate of less than 23%, well below the 40% required to achieve the annual target of about 13 trillion rupees.
In November alone, the Fed missed its target of Rs 1.003 trillion by Rs 166 billion, collecting Rs 837 billion, despite withholding Rs 35 billion of taxpayers’ legitimate refunds. This is the fourth monthly deficit in five months.
The revenue shortfall comes amid record tax measures, including new taxes worth 1.5 trillion rupiah targeting the working class and the corporate sector, as required under an International Monetary Fund program.
However, the IMF has raised concerns about declining collections of indirect taxes, including sales tax, federal excise duties, and customs duties, which have declined despite increased rates on essential items such as milk, vegetables, and medical tests.
While income tax collections exceeded targets by 190 billion rupees, taking their total to 1.983 trillion rupees, indirect taxes lagged behind. Sales tax collections amounted to Rp1.546 trillion, Rp310 billion below the target despite a 23% year-on-year increase.
Federal duty collections rose to 277 billion rupees, but were still 100 billion rupees below expectations, while customs duties reached 473 billion rupees, a loss of 137 billion rupees.
Despite the appointment of Rashid Langrial as FBR head and the introduction of a Rs32.5 billion incentive package to tax officials, including new cars and additional salaries, the tax authority’s performance remains under scrutiny.
The International Monetary Fund will review tax collection data for December to determine whether a reduced budget is needed. Possible measures could include imposing additional taxes on sectors such as fertilisers, imports and contractors.