The International Monetary Fund (IMF) has projected a Rs490 billion shortfall in the Federal Board of Revenue’s (FBR) annual tax collection target, estimating revenues to reach Rs12,480 billion instead of the planned Rs12,970 billion.
This assessment puts the government in a tough spot, requiring either spending cuts or fresh tax measures to bridge the fiscal gap, The News reported on Thursday.
Now the finance ministry would be given two options by the IMF — either to cut down the expenditures proportionally to match the fiscal requirement for avoiding escalation in the budget deficit after projecting revenue shortfall or take additional revenue measures in the shape of a mini-budget on an immediate basis.
It will be the choice of the government to make an appropriate decision during the upcoming policy-level talks, which will commence between the two sides next week.
Tobacco industry demands 25% cut in FED
Meanwhile, representatives from Pakistan’s tobacco industry briefed the IMF review mission on Wednesday, recommending a 25% reduction in the Federal Excise Duty (FED) and the introduction of a third tax tier due to declining volumes and revenues.
In their presentation, industry representatives highlighted that the FED had increased by 254% in recent years, leading to a drop in both tax-paying cigarette volumes and revenues.
The industry noted that the FBR’s tax collection from tobacco stood at Rs148 billion in the fiscal year 2021-22, but afte
