ISLAMABAD: The government plans to set revenue collection target between Rs4.5 trillion to Rs4.7tr in the budget for fiscal year 2020-21, documents seen by Dawn showed on Monday.
The government also shared revenue targets with the International Monetary Fund (IMF) officials in the latest round of meetings, according to sources in the Finance Division. However, the IMF’s approval of the revenue plan has been delayed and the matter will be taken up during a meeting scheduled in the third week of June.
Sources in the Finance Division told on Monday that the government has already shared its revenue collection proposals with fund officials to seek approval.
“We had a detailed meeting with the IMF officials today [Monday] over the revenue collection plan”, the sources said, adding that these meetings will continue until the cabinet approves the budget.
Fund wants Rs5.1tr collected, authorities say Rs4.7tr
The IMF has set the Federal Board of Revenue (FBR) revenue collection target for the year 2020-21 at Rs5.1tr, up 30 per cent from the FY20’s proposed collection.
“We have shared our own calculation with the IMF”, sources said, adding that the IMF is yet to approve the targets.
For the current year, the IMF has lowered the FBR’s tax target to Rs3.9tr, from Rs4.8tr accounting for the impact of Covid-19 on businesses.
According to sources, the government will announce its own revenue target in the budget keeping in view of the impact of lockdown on the economy.
“We have conveyed to the IMF that the government cannot impose any new tax in the budget as people are not ready to accept new tax measures amid the coronavirus outbreak”, the sources said.
IMF officials and government reached an understanding on the continuation of major tax measures introduced last year. The IMF has also asked government to avoid giving tax incentives to rich people, according to the sources.
The fund wants Pakistan to focus on giving incentives to only those sectors which cater to vulnerable and poor people. “We have identified few sectors for these purposes”, the sources said, adding that the IMF is against generalised tax incentives.
At the same time, the IMF has also asked Islamabad to continue with the current tax system introduced for the five export-oriented sector—textile, sports, surgical, carpet and leather.
“No zero-rating will be considered in the budget”, the sources said, adding no change will also be made in the standard sales tax rate of 17pc.
The budget will focus on simplification of tax laws, procedures and removing anomalies in the budget for next fiscal year. Other measures include administrative changes to improve compliance.
The revenue collection will depend on the quantum of growth in economy and inflation amid the ongoing coronavirus impact.
The FBR estimates a revenue loss of Rs450 billion in the first quarter (July-September) of the next fiscal year in case the partial lockdown remains. It further projects that in case of an extension in the lockdown, the tax body will see another shortfall of Rs350bn.