Taxes & Revenues

Tax and Revenues Federal Budget 2020-21 has presented an ambitious revenue plan (see Table 3.1). Considering the past performance, it is likely that the targets will be underachieved. Revenue forecasting models, if any, used by the Ministry of Finance and the FBR, always overestimate the expected revenue performance. The total tax collection grew by 6.1 percent in FY2020 against • The revenue collection target has been set at Rs 5.83 trillion for the upcoming fiscal year 2022 and is less than the IMF recommendations of Rs6 trillion. This collection, if achieved, would be a 24 percent increase in YoY on the Rs4.7 trillion target surpassed by the revenue collection agency FBR. The non-tax collection target will be set at Rs1.42tr, an increase of 22 percent. The proportion of provincial taxation would be Rs3.41tr, thus an increase of 25 percent revenue given to provinces. The government spending would increase 06 P A G E the meagre growth of 0.1 percent in the comparable period of FY2019. In absolute terms, tax collection stood at Rs 4,747.8 billion in FY2020 against Rs 4,473.4 billion in FY2019. Tax Revenue target for the FY2021 has been set at RS 5.83 trillion. Table 3.1 shows the composition of tax and non-tax revenue along with performance and target value for the next fiscal year.