FBR misses six-month tax target by Rs330bn, easing immediate mini-budget risk

The Federal Board of Revenue (FBR) missed its revised tax collection target for the first half of the current fiscal year by Rs330 billion, according to provisional figures, easing — but not eliminating — the likelihood of a mini-budget in January.

The revenue authority collected Rs6.16 trillion during the July–December period, falling short of the revised target after the International Monetary Fund (IMF) reduced the goal by Rs214 billion to account for lower inflation, subdued economic activity and flood-related disruptions. Against the original target of Rs6.7 trillion, the shortfall stood at Rs545 billion.

Despite the gap, the collection was better than FBR’s own projections, as it had earlier informed the prime minister that the shortfall could exceed Rs560 billion.

Officials attributed the relatively improved outcome to Rs391 billion collected on the final day of December, when banks were kept open until late evening, and a sharp reduction in refunds. Refund payments in December were 47% lower than a year earlier.

Revenue growth during the six-month period remained sluggish at 10%, well below the pace required to meet the annual target of nearly Rs14 trillion. December collections totalled Rs1.425 trillion, missing the monthly target of Rs1.56 trillion.

Under Pakistan’s IMF programme, the government had committed to introducing additional tax measures worth at least Rs200 billion if revenue shortfalls persisted. Proposed measures include higher sales tax on solar panels, increased withholding taxes on mobile and landline phone usage, higher tax on cash withdrawals by non-filers, and the extension of federal excise duty to confectionery and biscuits.