Reportedly, the IMF expects FBR tax revenues to grow by over 30 percent in the upcoming fiscal year (FY25).
However, achieving such growth is simply impossible without broadening the tax base and further taxing the existing base, especially when inflation is falling, and GDP growth is expected to remain low.
It is nearly impossible to achieve tax growth twice that of nominal GDP growth, which is anticipated to be around 15-16 percent (comprising 12-13 percent inflation and 2-3 percent GDP growth). The government needs to increase taxes on the existing base and introduce new taxes as well.
This presents the first major challenge for the new finance minister. What will be his strategy for generating tax revenues? What are his plans to achieve such ambitious growth?
The FM is embarking on a risky path. He might intensify efforts to bring retailers and traders into the tax net, potentially alienating the core base of PML-N (Pakistan Muslim League-Nawaz) voters. Already, the middle-income rural farming community is in discontent due to the self-created wheat crisis.........