The Federal Board of Revenue (FBR) has estimated to collect Rs. 5,829 billion in 2021-22 after including revenue from policy and administrative measures, depending on the performance of the economy.
The FBR’s report on “Evidence-Based Revenue Forecasting FY 2021-221” revealed that the revenue forecast for 2021-22 by applying the buoyancy estimates and projected respective macroeconomic indicators would be Rs. 5,336 billion without policy/administrative measures. After adding policy/enforcement measures the target would be Rs. 5,829 billion. However, the revenue collection and achievement of the target would largely depend on the performance of the economy against the targets.
FBR collects Direct Taxes (DT), Sales Tax (Domestic & Imports), Federal Excise Duty (FED) and Customs Duties (CD). In this study, tax-wise buoyancy estimates have been used to forecast the FBR head-wise revenues for FY 2021-22. The tax buoyancy is an indicator to measure efficiency revenue mobilization efficiency and responsiveness in response to the GDP or national income growth. A buoyant tax means the tax revenues increase more than proportionately in response to a rise in national income/GDP/base.
The FBR’s report stated that the autonomous growth has been applied on base year’s expected collection (i.e. 2020-21) for each respective head to project an increase of Rs. 636 billion. This addition has been added in the expected collection of 2020-21, thus, the revenue forecast for 2021-22 without additional Policy/Admn measures has been obtained to the tune of Rs. 5,336 billion. The required growth over the expected collection of 2020-21 i.e. Rs. 4,700 billion would be 13.5 percent in 2021-22. However, with the addition of Policy/Admn measures the target for FY 2021-22 would be Rs. 5,829 billion, requiring a growth of about 24 percent.
With the recovery of the economy, the revenue collection is also improving. And further improvements in coming months hope the tax collection shall also increase, enabling FBR to achieve its revenue during 2021-22 target, FBR report added.
The major part of government tax revenues is collected by FBR. A substantial increase in tax collections has been witnessed during the last two decades. FBR tax collection was just around Rs.392 billion in 2000-01 which has jumped to around Rs. 4 trillion in 2019-20. The average growth till FY 2017-18 remained 14.1%, however, due to Covid-19 pandemic, the yearly growth has plummeted, thus affecting slightly the average annual growth for the period 2001-2020 as well (13.9%).
Five Years FBR Collection Trend
The last five years’ collection trend is shown in the following table. The 5 years average growth was 9.3%, however, by excluding the last two years, the average growth for normal years i.e. FY 2013-14 to FY 2017-18 stands at 14.6%. Similarly, in the tax-GDP ratio, a similar trend has been noticed and it kept on rising till FY 2017-18 and reached 11.2 percent, but later on, this healthy trend couldn’t continue during FY 2018-19 and FY 2019-20, which is mainly attributed to Covid-19 pandemic related economic challenges, FBR added.
Source: Pro Pakistani