Calculations at the Federal Board of Revenue (FBR) for the growth projections of revenue indicated for the next six months of tax collections are underway.
However, sources representing the tax machinery told ProPakistani that efforts to make hefty forecasts are railed with fears that the remaining half of the budgetary year will be tougher for the government.
Sources said these projections do not offer hope for more than four percent revenue growth at the import stage, and a paltry two percent from local sales and incomes. This poor growth over these six months will torment the government officials responsible for setting and ensuring a 15 percent growth target for federal tax revenues in the 12 months of the current fiscal year.
Sources added that most of this growth has been calculated on the hike in the inflationary trends over the last two years. Inflation grew by 10 percent in the imported commodity-related index as well as in those produced locally. They explained that the price of the dollar against the rupee grew by 40 percent to help the FBR acquire an additional eight percent growth of revenues at the import stage.
The July-December revenue grew by nine percent at the local stage, and the overall tax growth in the months after the peak pandemic period has been 17 percent. However, this growth cannot be consistent from January to June 2021, according to FBR sources.
New inhouse projections indicate that even the launch of the supplementary Finance Bill, 2021, will not be of significant help in achieving an annual tax collection growth beyond 11 percent. Calculated over the 2020-21 fiscal year’s growth of tax collection, the 2021-22 tax growth will remain depressed on account of the liquidity crunch and the depleting incomes over the remaining half of the current fiscal year, as noted by sources from the Ministry of Finance.
The liquidity crunch is bound to occur on account of the dollar’s consistent hike against the rupee and the shrinking demand for goods and services that could attract the diminishing disposable incomes at the level of the middle-income group. The sources added that the downslide will impact the sales of both imported and locally produced goods.
