The Federal Board of Revenue has finished the fiscal year, 2021-2022 with a flourish, and has achieved a revenue collection of Rs 6000 billion, against the budgeted Rs 5829 billion, which was especially commendable after the government had removed taxes from petroleum since March. There was a 29 percent increase over the previous year’s collection of Rs 4651 billion. A similar jump will be needed for this year’s target of Rs 7000 billion. However, while the FBR settles to the task of collecting that amount in the fiscal year starting July 1, there is an odd dispute going on between the present government and the former PTI government as to who can claim credit for this extraordinary collection, particularly the strong collection in the last quarter, which made sure the FBR stayed ahead of target. The present government cannot claim both that the previous one laid ‘landmines’ for it, and yet take credit for any positive measures it took. If former Finance Minister says the collection was due to his measures, he deserves as much credit as Energy Minister Hammad Azhar deserves blame for failing to import furnace oil and LNG.
A lot of the growth in collection was driven by imports, with such items as customs duty, advance income tax and excise duty registering an indicative increase. However, that sector might not only fail to register any growth, but might see a decline, because of the ban that has been slapped on the import of luxury goods. Not only are such goods of higher value, but they are more often than not also subject to excises collected at the import stage.
The main hope for the FBR in meeting its collection targets for this fiscal will come from the various levies and taxes that will come on fuel, and which will be reintroduced from July 1 under pressure from the IMF. Though these levies might gladden the hearts of the FBR, they will make the ordinary consumer scream, hardpressed as he is by an inflation that already has made him miserable. While Rs2,191 billion in income tax was collected last year, against Rs1,671 billion the year before, bringing more taxpayers into the tax net will yield more revenue than merely squeezing the existing taxpayer.
