ISLAMABAD: Prime Minister Shehbaz Sharif has ruled out the implementation of a mini-budget and directed authorities to expedite decisions in pending tax cases in the Supreme Court, aiming to address the Rs386 billion revenue shortfall. During a series of meetings with the Federal Board of Revenue (FBR) this week, the PM received updates on the hiring of appellate tribunal members and the progress of court cases linked to the growing tax shortfall.
Sources revealed that the prime minister was informed that the FBR may miss its Rs957 billion revenue target for January, and the tax shortfall could widen further. In response, Sharif instructed the FBR to increase enforcement efforts and recover at least Rs400 billion out of the projected Rs7.2 trillion tax gap for the July-December period.
The prime minister reiterated that no additional burden would be placed on taxpayers, stressing that the FBR must double its efforts, especially after his approval of financial packages for employees. The finance ministry confirmed that funds for FBR procurements had been released, although not fully disbursed.
Earlier reports showed that the tax gap could increase to Rs7.1 trillion by the end of the fiscal year, with sales tax, income tax, and customs duties accounting for a large portion of the shortfall. The FBR had initially targeted 186,000 top tax evaders, but only Rs378 million was recovered from 38,000 high-potential taxpayers who responded to tax notices.
Although the tax-to-GDP ratio rose slightly to 10.8% in December, it still fell below IMF targets for the first half of the fiscal year, which was pegged at 10.2%. Despite the increased tax ratio, the country’s economic growth remains subdued, with only a 0.9% growth rate in the first quarter.
Prime Minister Sharif directed the FBR to request the IMF to reassess the performance of the tax machinery, given the improvement in the tax-to-GDP ratio. While he acknowledged the heavy tax burden on personal incomes and businesses, no action has been taken to alleviate the strain on the salaried class, which has been significantly impacted by recent taxation policies.
Furthermore, Sharif ordered the Attorney General to push for an early resolution of pending tax cases, some of which involve controversial taxes. The FBR estimates that Rs100 billion could be recovered if these cases are resolved in this fiscal year. However, delays in court proceedings have been attributed to both the FBR and the judiciary, with various cases pending since 2020-21.
In a separate development, the prime minister also instructed the appointment of skilled professionals to expedite the resolution of legal cases concerning FBR revenues, proposing the recruitment of top talent for appellate tribunals.
Additionally, PM Sharif expressed appreciation for the Muslim World Leagueβs support in promoting the true identity of Islam globally and fostering interreligious respect. He also thanked the League for its efforts in establishing the Sirat Museum in Pakistan and for its cooperation in organizing the International Conference on Girls’ Education in Muslim Countries.
