The Federal Board of Revenue (FBR) is struggling with a revenue shortfall exceeding Rs500 billion during the first half of the fiscal year, casting doubt on its ability to meet the Rs6,090 billion target, according to sources.
The tax-to-GDP ratio stands at 10.3%, below the targeted 10.6%. Officials attribute this gap to inaccurate budget estimates for inflation and imports. Inflation, projected at 12%, dropped to 4.9%, while imports grew by only 5%, far below the anticipated 16%. This resulted in a 7% decline in import-based tax revenue, further exacerbating the shortfall.
The property sector has also contributed to the deficit. Tax rates of 11% to 12% have significantly reduced property transactions, cutting activity in half. Officials suggested that reducing property taxes could revive the sector and alleviate market pressures. They clarified, however, that the International Monetary Fund (IMF) is not influencing property tax policies.
The FBR is working on potential tax adjustments to address the challenges, particularly in the property sector, but achieving its revenue goals remains a daunting task.