COVID-19 makes it hard for FBR to meet tax collection target of Rs3,908 billion


The COVID-19 pandemic has slowed economic activities around the globe and in Pakistan as well, making it difficult for the Federal Board of Revenue (FBR) to meet its tax collection target of Rs3,908bn for this fiscal year. 

The lingering COVID-19 has resulted into a dismal performance of the FBR as its provisional collection in the outgoing month (May 2020) stands at just Rs227 billion.

The FBR is heading towards flat growth in the last two years under the present government as the Board’s collection in 2017-18 stood at Rs3,842 billion under the previous government. 

The FBR’s collection dropped to Rs3,832 billion in the last fiscal year 2018-19, but now it will be hovering around Rs 3,850 billion in outgoing fiscal till June 30, 2020. It will be unique and for the first time in the history of Pakistan when the FBR’s revenue growth remained almost flat in the last two consecutive years. This outgoing fiscal year can be blamed on the COVID-19 pandemic.

The FBR has so far collected Rs3,534 billion in the first 11 months (July-May) period against the thrice downward revised target of Rs3,908 billion envisaged for the current fiscal year. The FBR will have to face a gigantic task of collecting Rs374 billion in the last month for achieving a downward revised target of Rs3,908 billion till June 30, 2020.

The government had envisaged FBR’s tax collection target at Rs5,555 billion on the eve of the last budget, but it was revised downward to Rs5,238 billion after the first review of IMF under a $6 billion Extended Fund Facility (EFF) programme. Then the FBR’s target was agreed upon at Rs4,803 billion on eve of the incomplete second review of the IMF programme in the pre-COVID-19 scenario, but when this deadly virus broke out, the IMF staff further slashed the FBR’s tax collection target to the tune of Rs3,908 billion for outgoing fiscal year.

“We have collected Rs227 billion in outgoing month (May 2020),” a top official of the FBR confirmed. The FBR will have to collect Rs374 billion in last month (June) for materialising its revised target of Rs3,908 billion in outgoing financial year. The burea had collected Rs242 billion in April 2020 after the outbreak of COVID-19 pandemic so its collection in May 2020 further declined.

In the first 10 months (July-April) period of the current fiscal year, the FBR’s total collection touched Rs3,307 billion. The outbreak of COVID-19 had caused a revenue loss of over 1,000 billion in the last three months (March to May) period.

The FBR’s collection stood at Rs242.4 billion in April 2020 against Rs289.905 billion in April 2019, reflecting a decrease of 16.4%. The tax machinery paid refunds of Rs15.119 billion during April 2020 against Rs6.661 billion in April 2019, reflecting an increase of Rs8.458 billion.

 In totality, the FBR paid refunds of Rs116.961 billion during July-April (2019-20) against Rs65.150 billion during the same period of last fiscal year, reflecting an increase of Rs51.811 billion.

Keeping in view performance of last three months, it will be hard for the FBR for materialising desired tax collection target of Rs3,908 billion so its collection might be hovering around Rs3,850 billion maximum in an outgoing fiscal year if the FBR machinery utilises its full energies in last month of the current fiscal year.

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