Govt eyes new fiscal measures amid revenue shortfall
ISLAMABAD — The federal government is preparing to roll out a fresh wave of taxation measures worth nearly Rs200 billion to plug a growing revenue gap in the second half of the fiscal year, following the Federal Board of Revenue’s (FBR) failure to meet its collection targets during the initial months.
According to senior officials familiar with the matter, the proposal recently discussed with the International Monetary Fund (IMF) during staff-level talks includes higher taxes on non-filers, solar panel imports, and telephone usage. The measures are being framed as part of Pakistan’s ongoing commitment to fiscal reforms tied to the IMF’s $7 billion loan programme.
While FBR Chairman Amjad Zubair Tiwana has publicly ruled out the possibility of a mini-budget, insiders confirmed that a “contingency plan” was shared with the IMF, detailing possible revenue-raising options should the shortfall persist. Officials say that if government income continues to lag behind expectations, the introduction of new taxes would become “unavoidable.”
Proposed Tax Adjustments
The plan outlines several key changes designed to boost government revenue:
- Cash withdrawals by non-filers: The tax rate may rise from 0.8% to 1.5%, potentially adding around Rs30 billion to government coffers.
- Sales tax on solar panels: The levy could jump from 10% to 18%, significantly impacting the affordability of renewable energy equipment.
- Taxes on phone usage: The tax on mobile calls may increase from 15% to 17.5%, while the rate on landline calls could rise from 10% to 12.5%, together expected to generate roughly Rs44 billion.
- Federal Excise Duty (FED) on consumer goods: A 16% FED on biscuits, sweets, and chips is projected to bring in another Rs70 billion.
Revenue Gap Widens
The FBR has so far struggled to meet its targets, recording a shortfall of Rs198 billion in the first quarter. Revenue collection stood at Rs2,885 billion against the target of Rs3,083 billion. For the first four months of FY2024–25, the FBR’s goal exceeds Rs4,100 billion, while the annual target is pegged at Rs14,131 billion.
Officials have cautioned that if additional taxes are not implemented, the government might be compelled to reduce the development budget or revise the yearly tax target downward. The situation, they warn, could place further strain on fiscal management at a time when Pakistan is already under pressure to maintain economic discipline under the IMF program.
