FBR’s tax collection crisis deepens with over Rs600 billion shortfall

ISLAMABAD: The Federal Board of Revenue (FBR) is grappling with a massive tax shortfall of Rs606 billion after eight months of the current fiscal year, falling short of its target of Rs7.95 trillion.

Despite a provisional collection of Rs7.34 trillion between July and February—an increase of around 28 per cent—the FBR is under pressure due to the shortfall, which has widened the gap with the goal set by the International Monetary Fund (IMF).

This financial setback has been compounded by a controversial incident involving the finance minister’s office, which led to the transfer of a senior female officer in the Customs Department.

On February 26, the Collector Customs of Islamabad, a Grade-20 officer known for her professionalism, was abruptly removed from her post after questioning an unusual request from the finance minister’s staff. The request involved fixing the national flag on a borrowed vehicle late in the evening, a task which she deemed unreasonable and outside her responsibilities.

The incident unfolded when the finance minister, who traditionally avoids using government vehicles, requested a non-duty-paid vehicle for his trip to Peshawar. Customs officers were tasked with providing the vehicle and were later instructed to fix the national flag on it at 8:30 PM.

The officer’s refusal to comply with what she considered an improper demand led to her removal, sparking anger among her colleagues. Her transfer has been criticised by the Pakistan Customs Service Officers Association, which accused the minister’s office of undermining the department’s autonomy.

The Customs Officers Association issued a statement calling for the cancellation of the transfer order, describing the situation as a troubling abuse of power that erodes merit and professional judgement.

The association also voiced concerns about the suspension of officers who had requested postings due to personal issues.

On the tax collection front, the government has struggled to meet its targets for the seventh consecutive month. February’s collection of Rs845 billion fell short of the monthly target by Rs138 billion, and the FBR has missed its targets for sales tax, federal excise duty, and customs duty.

However, income tax collection exceeded expectations, reaching Rs3.52 trillion—Rs835 billion higher than last year—while the sales tax and customs duty targets were not met.

Despite these challenges, the FBR’s performance in tax collection is being closely scrutinised, with the government’s reliance on new taxes, particularly on goods and services, causing frustration among the public and exacerbating the pressure on tax authorities.

Read next: March 10 MPC meeting: SBP likely to keep policy rate unchanged