Pakistan’s Federal Board of Revenue (FBR) has set an increased revenue collection target of Rs. 7.440 trillion for 2022-23, up by Rs. 436 billion from the previous target of Rs. 7.004 trillion. This announcement has come as the FBR is seeking to increase its tax revenue to boost the country’s economic growth and development.
To meet the new target, the government is planning to implement several tax measures, including the imposition of an Income Levy Tax on high-earning individuals and corporate entities. The new tax will be levied on those earning over Rs. 150 million, 2% on those earning above Rs. 200 million, 3% on those earning above Rs. 250 million, and 4% on those earning above Rs. 300 million. These tax measures are expected to raise Rs. 440 billion in revenue, with 75% coming from direct taxes.
In addition to the new tax measures, the government has also proposed tax relief measures worth Rs. 85 billion, resulting in a net effect of Rs. 355 billion. The Sales Tax/FED measures will amount to Rs. 90 billion, with sales tax relief set at Rs. 30 billion, resulting in a net effect of Rs. 60 billion. The revenue from administrative and enforcement measures is expected to reach Rs. 200 billion, up from Rs. 175 billion in the previous year.
The government also plans to generate revenue from the deemed income of immovable property, which is expected to bring in Rs. 30 billion. Additionally, a 2% poverty alleviation tax on high-end earnings of all persons is expected to raise Rs. 38 billion. However, this tax may face legal challenges, creating uncertainty in revenue collection.
It is worth noting that the FBR’s increased revenue collection target is in line with the government’s efforts to reduce the budget deficit and stabilize the country’s economy. However, to achieve the target, the FBR will need to improve its tax collection and enforcement mechanisms, reduce tax evasion, and broaden the tax base by bringing more taxpayers into the tax net.
In conclusion, the FBR’s increased revenue collection target for 2022-23 is a positive step towards strengthening Pakistan’s economy. However, achieving the target will require concerted efforts from the government, the FBR, and the taxpayers themselves. With effective tax policies and administration, Pakistan can meet its revenue collection targets and pave the way for sustainable economic growth and development.