KARACHI: In a pre-budget exercise, the government has moderated its revenue collection target for the next financial year, a source privy to meetings told Dawn.

“The FBR’s projected tax collection target has been marked at Rs3.6 trillion for the budget 2016-17, against Rs3.1 trillion during the financial year ending in June 2016, envisaging a growth of 16 per cent in tax collection,” the source revealed.

Finance Minister Ishaq Dar had stated earlier that the FBR has achieved 52pc growth in tax collection since the PML-N government assumed power three years ago.

The Budget Strategy Paper (BSP), approved by the federal cabinet last month, had envisaged the FBR’s projected target of Rs3.7 trillion, but according to an insider the target was scaled down by the finance minister as he was empowered by the cabinet to revise projections if deemed necessary.

“Instead of setting an unrealistically high target and revising it down multiple times during the year, it was considered more appropriate not to get overambitious at the stage of budget announcement,” a senior source said, elaborating on the logic behind the move to revise the targets that the FBR had projected.

The FBR hierarchy argued that their projection was based on detailed working and could have been met if the government allowed them to introduce measures for higher mobilisation of taxes. “It was not possible to increase tax collection by 20pc without raising rates or bringing new segments in the tax net,” an FBR official said.

The BSP for 2016-17 had envisaged that the FBR tax revenue will be enhanced to Rs 3,735 billion (20.3pc increase as compared to budget 2015-16) through a combination of tax measures, and improved tax administration.

The broadening of tax base, removal of non-essential Statutory Regulatory Orders (SROs) and new measures were policy priorities. According to officials, the finance minister has already directed the FBR to minimise the number of SROs with regressive ones going first to provide relief to people.

Published in Dawn, May 10th, 2016