ISLAMABAD-The government has yet to come with a plan to bridge the massive shortfall in tax collection that had already touched Rs284 billion in first six months (July to December) of the current financial year.

Tax collection shortfall is increasing with the passage of every month despite the fact that the government had introduced massive taxation measures in the budget for the current fiscal year. The Federal Board of Revenue (FBR) needs to collect mammoth Rs3041 billion in six months, which is unrealistic without additional revenue generation measures.

“The government has not asked the FBR to prepare mini budget so far, “said an official of the FBR.

He also admitted that government could not achieve the revised tax collection target without mini budget. However, he was of the view that government is focusing on retails and wholesale sectors to generate additional revenue in next six months period.

Adviser to Prime Minister on Finance and Revenue Abdul Hafeez Shaikh had already showed concerns over the tax collection in the current fiscal year. He had directed the FBR officials to take extraordinary measures to increase revenue collection.

It is worth mentioning here that FBR’s tax collection was recorded at Rs2083 billion during July to December period of the year 2019-20. The government had faced shortfall of Rs284 billion in tax collection in first six months of the current financial year.

Target was Rs2367 billion for the period under review. Keeping in view the massive shortfall, the International Monetary Fund (IMF) had recently cut the unrealistic tax collection target of Rs5.503 trillion to Rs5.238 trillion, a reduction of Rs265 billion.

The FBR is attributing tax collection shortfall due to reduction in imports of the country. According to the FBR, an estimated loss of Rs56 billion of taxes is incurred on every billion dollar of import compression. FBR has redoubled its efforts on domestic side and has managed to shift its tax dependence on import taxes from 56 percent to a little above 40 percent this year.

With expected upturn of economic activity in last six months and a likely stabilisation of imports, it is expected that FBR is going to collect an unprecedented amount of taxes this year without disrupting and distorting economic activity, the FBR.