Tax revenue overestimated in the budget

Budget prefers politics over economy: PEW

ISLAMABAD - The Pakistan Economy Watch (PEW) on Friday said government income due to taxation has been miscalculated in the budget as Federal Board of Revenue’s (FBR) tax collection target of Rs 2,810 billion is unachievable.


Government has failed to broaden the tax base leading it to increased burden on existing taxpayers and to widen the scope of Withholding Tax (WHT) as well as indirect taxation, it said. The FBR has planned to meet the target through reliance on utility bills, collecting Rs 50 billion through WHT, and other initiatives but it would miss the target as usual, said Dr. Murtaza Mughal, President PEW.


The FBR is expecting Rs15 billion through five per cent tax on bonus shares without realising that people would find out ways to give dividends to shareholders bypassing taxes making whole exercise unproductive. He said that FBR would hardly be able to collect Rs 2500 to 2600 billion due to narrow tax base, exemptions and extra leniency towards 2500,000 retailers.


Dr. Murtaza Mughal said that FBR’s plan to collect just Rs one billion from retailers is shocking, adding that tax collection mechanism will remain major cause of fiscal imbalances unless serious reforms are initiated. Increased reliance on WHT in the budget indicates government’s belief that FBR has become ineffective as bringing tax-dodgers into the tax net remains its weakest area, he observed.


The overall budget deficit would be curtailed at 5.1 per cent of GDP to meet IMF condition which may slow down the shambling economy. There is nothing in the budget which can turnaround the economy on a sustained basis, rather it is a disappointing document which has supported politically-motivated projects and ignored real issues like energy and education. 

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