“`html
FBR‘s Tax Revenue Role: Squeezing More from the Compliant?
Table of Contents
Pakistan’s Federal Board of Revenue (FBR) is under scrutiny as fiscal year 2025 concludes, with questions arising about its methods of achieving revenue targets.While the FBR chairman has highlighted a importent increase in tax collections despite economic headwinds, concerns linger about whether this growth stems from broadening the tax base or intensifying the burden on existing taxpayers.
FY25 Tax Collection: A Closer Look
The FBR reported a ample increase of Rs2.4 trillion in tax collections compared to the previous year, even amidst slow economic growth and decelerating inflation. The chairman emphasized that much of this increase was attributed to “new tax measures and rates” and “improved compliance,” accounting for approximately Rs1.67 trillion of the total incremental revenue collection.
Did You Know? Autonomous growth refers to revenue increases derived solely from inflation and economic expansion.
However, a detailed breakdown of the specific revenue heads contributing to the Rs805 billion increase from “new taxes and rates” remains elusive.Data from July to March indicates a Rs1.7 trillion increase in FBR tax collection, with Rs863 billion originating from direct taxes, a significant portion of which is highly likely paid by salaried individuals.
The Burden on Salaried Individuals
The core issue is whether the FBR’s success is due to expanding the tax base or extracting more from a limited pool of taxpayers. The chairman’s reluctance to provide a detailed breakdown fuels concerns that the burden disproportionately falls on salaried individuals who have already experienced a decline in purchasing power due to inflation between 2021 and 2024.
These individuals face a double whammy: first, shouldering the costs of the state’s expansionary monetary policies, and second, contributing to bridging the fiscal deficit. Some of these funds are reportedly allocated to increased compensation for government employees and ministers, effectively shielding them from the consequences of economic mismanagement.
Pro Tip: Understanding the composition of tax revenue is crucial for assessing the fairness and sustainability of fiscal policies.
Policy Depiction and the Finance Bill 2025
A key factor enabling this situation is the limited voice that salaried individuals have in policy discussions. During the Finance Bill 2025 debates, concerns were raised about taxes on solar panels and the powers of arrest for FBR officers. However,the specific challenges faced by salaried individuals received scant attention,with representatives seemingly more focused on the rights of non-filers and tax ev
