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Ambitious revenue target

May 28, 2019

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THE new finance team led by Abdul Hafeez Shaikh has set for itself the highest increase in the revenue target in well over a decade and one is hard-pressed to figure out whether to congratulate them for their ambition or duck for cover from the implications of what is to come. At a full-court press conference, held on Saturday, the prime minister’s adviser on finance was flanked by a large team consisting of everyone from the FBR chairman to the power minister, and spoke for almost an hour trying to address concerns and engage in some early public messaging on what is to come in the next few months. At the heart of this whole event was the Rs5.55tr revenue target that he said would be given to the FBR in the forthcoming budget, which represents a nearly 35pc increase in revenue collection from the current year. It is hard to recall the last time the FBR was asked to mount a revenue effort of this magnitude. Does this mean a tsunami of taxes is about to come down upon us?

Mr Shaikh seems to think this can be done without increasing the burden on those who are already paying their taxes as per the rules. He cited data which shows that the number of utility connections under industrial category is in the hundreds of thousands, whereas there are only slightly more than 40,000 industrial taxpayers registered with the FBR. The story is the same if one looks at the number of companies registered with the SECP, which is also far larger than those registered with the tax authorities. According to the adviser, who seems to be taking his lead on the matter from the FBR chairman, these are the directions in which his government will work to climb towards their revenue target for the next year.

There are grounds for scepticism though. This is not the first time we have heard of using data innovatively to triangulate consumption patterns and identify potential new taxpayers. Such efforts have been mounted several times in the past as well, and they should continue in the future too. The question is whether such exercises can yield the revenues that the government is looking for in a single year. Those outside the net are no fools. In the past, they have shown tremendous resilience and ingenuity of their own to thwart such moves. Roping them in is a long-term objective, but if the government is presenting this sort of work as a core part of their revenue plan for next year, it means one should brace for all sorts of resort to quick fixes and tax hikes on fuel and power, among other things. Mr Shaikh should do more to prepare the public for what seems like an ambitious revenue plan coming up.

Published in Dawn, May 28th, 2019