Ambitious taxation target: tall order for a low-growth economy

IN LINE with the International Monetary Fund’s (IMF) demands, the Shehbaz Sharif government has reportedly set a massive tax target of Rs12.9 trillion for the incoming fiscal year, more than 41 per cent higher than the collection projected for fiscal 2024. This new tax target will require additional revenue measures of at least Rs2 trillion and, despite a projected 30pc increase in the Federal Board of Revenue’s (FBR) tax collection this year, many consider it to be rather ambitious considering the low-growth, low-inflation economic environment. The FBR’s capacity to achieve this target remains in doubt, and concerns linger regarding its field formations, which, the grapevine says, have been staffed in recent days with ‘favoured’ individuals in the most coveted positions. Yet, policymakers are confident that they can achieve a “tax miracle” without placing any new burden on the general public, even with the economy projected to grow at 3.6pc and inflation expected to remain at 12pc.