ISLAMABAD - The government would not take any measure to generate additional revenues during ongoing fiscal year to bridge massive revenue shortfall of Rs230 billion, as it is relying on Supreme Court for reviving taxes on mobile phone cards.

“The government so far has no plan to take any measure to generate additional revenues,” said an official of the Federal Board of Revenue (FBR). He further said that government has presented an alternative formula to the Supreme Court for revival of taxes on mobile phone cards to bridge the revenue shortfall.

“The government will be able to generate sufficient revenues if Supreme Court restores taxes on mobile phone cards”.

It is worth mentioning here that government had presented a formula to revise taxes on telecom services, which was rejected by the apex court. Now, the FBR has presented new formula in the court.

In June 2018, the Supreme Court suspended deduction of taxes on the top-up of prepaid cards by mobile phone service providers. The annual revenue collection alone from these is around Rs80 billion.

The FBR is struggling to achieve the tax collection target. Meanwhile, the FBR would face revenue drop of Rs6.8 billion due to the recent mini budget. The National Assembly on Wednesday has approved “The Finance Supplementary (Second Amendment) Bill, 2019”, in which government has reduced and abolished several taxes to boost economic activities following demands of various sectors, including removal of tax on cash withdrawal from banks.

The FBR had faced massive shortfall of Rs230 billion in tax collection during eight months (July to February) period of the year 2018-19 despite introducing mini budgets. The FBR had collected Rs2335 billion during eight months (July to February) of the ongoing financial year as against the target of Rs 2,565 billion.

The FBR blamed the government’s incentives policies responsible for the massive shortfall in tax collection of Rs230 billion during July to February period of the year 2018-19.

According to the FBR, reasons for massive decline in tax collection are tax incentives on salaries given by last government, telecom tax suspended by the Supreme Court of Pakistan, reduced tax rates on POL products and slowdown of development programme in the country. An official said that tax incentives on salaries given by the last government and telecom tax suspended by the Supreme Court of Pakistan had caused revenue losses of over Rs50 billion so far. Similarly, reduced tax rate on oil products had also caused loss of Rs70 billion.

In September 2018, the PTI led coalition government had downward revised the tax collection target by Rs37 billion for the ongoing fiscal year 2018-19 despite taking additional taxation measures.

The previous PML-N government had set the tax collection target for Federal Board of Revenue (FBR) at Rs4435 billion for the current financial year.

However, the PTI government had downward revised the target to Rs4398 billion despite introducing additional taxation measures. The government is still struggling to achieve the target despite downward revising it.