The Federal Board of Revenue (FBR) has fallen short of its tax target by Rs833 billion in the first ten months of the fiscal year. This shortfall comes despite record tax hikes, reduced refunds, and an increase in collections by Rs1.95 trillion compared to last year. The April shortfall alone was Rs139 billion, exceeding the IMF limit by over Rs190 billion, prompting serious concerns over the upcoming budget.
FBR Chairman Rashid Langrial warned lawmakers that meeting tax goals this year and the next will be difficult. He ruled out major tax relief, although some cuts are expected for salaried individuals. The salaried class already paid Rs391 billion in taxes — 56% more than last year — and vastly more than traders. Meanwhile, a request to reduce the 18% sales tax on packaged milk to 5% is under consideration, but faces IMF resistance.
While tax collection efforts intensified, government spending has surged by 24% this year. The Prime Minister doubled cabinet size and raised salaries, pushing public expenses higher. Despite strong income tax growth, FBR missed targets for sales tax, federal excise duty, and customs duty. Sales tax underperformed by Rs775 billion, and customs revenue dropped due to low imports and document fraud.
As pressure grows, customs officials demanded fair treatment amid public criticism. They called for legal accountability and recognition of their efforts to combat smuggling. With fiscal space tightening, Pakistan’s economic managers face tough decisions ahead of the next budget.