Pakistan is set to unveil its Rs18.5 trillion budget today

In a bid to secure a fresh IMF deal, the Pakistani government is set to unveil the budget for 2024-25, with the Federal Board of Revenue (FBR) tasked with a tax collection target of Rs12.97 trillion for the next fiscal year.

This target is significantly higher than the revised estimates of Rs9.252 trillion for the outgoing financial year.

The FBR aims to achieve fiscal consolidation by reducing the overall fiscal deficit from over 7.6 percent in the outgoing fiscal year to 6.5 percent of GDP in the next budget. This will be done through increased revenue efforts and curtailing unbridled expenditures.

The focus will be on mobilizing tax revenue, particularly on the Inland Revenue (IR) front, including Income Tax and GST. The FBR plans to increase revenues by Rs1.7 trillion and Rs1.3 trillion through these channels, respectively, using nominal growth, effective enforcement, and taxation measures.

Out of the Rs12.97 trillion annual tax collection target, the FBR aims to collect Rs5.512 trillion through direct taxes, including Rs5.45 trillion from Income Tax, Rs4.919 trillion from Sales Tax, Rs0.948 trillion from Federal Excise Duty, and Rs1.591 trillion from Customs Duty.

To achieve these targets, the IMF suggests access to detailed data on taxpayers, including their socio-economic characteristics and taxes owed and paid. The FBR will need to utilize technology to manage and analyze large amounts of data.

The government also plans to cut expenditures on pension reforms, subsidies, and State Owned Enterprises. With a total outlay of over Rs18.5 trillion for the upcoming budget, the government will need to mobilize both tax and non-tax revenues while managing expenditures carefully.

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