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Express Tribune
2 days ago
- Business
- Express Tribune
Taxed to the limit, still in the red: govt misses target by a mile
The federal government has missed the annual tax target of nearly Rs13 trillion by a record margin of around Rs1.2 trillion, as the authorities failed to increase the tax revenues to 10.6% of the size of the economy, despite putting unprecedented additional burden on the people. The collection, nonetheless, was Rs2.43 trillion or 26% higher than the preceding year, proving independent analysts correct that the government had set a wrong target in the first place that was impossible to achieve without a mini-budget. The Federal Board of Revenue (FBR) provisionally collected Rs11.73 trillion in the fiscal 2024-25 – falling short of the target by about Rs1.2 trillion, according to its provisional figures, on Monday, the last day of the financial year. The federal government had given a commitment to the International Monetary Fund (IMF) that it would increase the tax-to-GDP ratio to 10.6% in fiscal 2024-25. However, the ratio remained at little over 10.2% of the GDP, according to the provisional figures compiled till Monday evening. The shortfall of about Rs1.2 trillion is unprecedented because the government had imposed a record Rs1.3 trillion in additional taxes in the budget. This follows the fiscal year 2019-20, when the economy suffered greatly due to Covid-19 and as a result the target was missioned by a margin of Rs1.6 trillion. After assuming the office in August last year, FBR Chairman Rashid Langrial had said that the collection through additional measures might not be more than Rs650 billion due to slowdown of the economy, and inflation falling to single digit. In July last year, former FBR chairman Amjad Zubair Tiwana had said that irrespective of the amount of efforts that the FBR would put in, the annual collection could not exceed Rs11.8 trillion. His prophecy was proven correct. The government overburdened the salaried class and taxed almost every essential consumable good, including packaged milk, to raise Rs12.97 trillion in taxes. The FBR had to chase an unrealistic tax target coupled with a slowing economy and falling inflation rate – the three key factors that have overshadowed the 26% increase in the collection from the sluggish economy. Finance Minister Muhammad Aurangzeb had vowed to achieve the over Rs12.9 trillion target without the need for the mini-budget. He could not succeed, although the government increased petroleum levy rates to record Rs78 per litre to offset the impact of tax shortfall on the primary budget surplus target. At the start of the fiscal year, the petroleum levy rate was Rs60 per litre on petrol and high speed diesel. The huge shortfall is also far more than what the government had committed to the IMF just in March this year, when the lender lowered the target by Rs640 billion for the full fiscal year. Subsequently, the government further downward revised the target to Rs11.9 trillion in June, which was missed, too. Prime Minister Shehbaz Sharif has been personally focusing on the affairs of the FBR and he has tried to introduce many new initiatives, including digital tracking of the economy and focusing on tax evasion prone sectors. FBR Chairman Langrial also got more fiscal incentives for his workforce, including giving them new 1,300 cc cars and additional one to four monthly salaries. The federal government approved Rs55 billion worth of two projects for the FBR to strengthen its workforce, set up new custom posts along the Indus River to curb smuggling and upgrade digital infrastructure. The tax authorities said that the results of all these initiatives would be visible in the new fiscal year. Langrial also vowed to take affidavits from chief finance officers of the companies to check under declaration of the sales and to collect more revenues from the businesses and the people, including the richest people of Pakistan. However, all such initiatives did not help reach the goal. Also, the government could not meet the commitment to collect Rs50 billion in income taxes from the retailers under the Tajir Dost Scheme. The collection could not even reach Rs50 million. For the new fiscal year, the government has set the Rs14.13 trillion worth tax target for the FBR, which requires 20% growth in collection over the last fiscal year's revenues. For the month of June, the FBR's target was Rs1.67 trillion. However, despite taking advances and slowing refunds, it could collect Rs1.49 trillion, falling short of the target by about Rs180 billion. The IMF compelled the country to impose new taxes, primarily burdening the salaried class and levying taxes on nearly all consumable goods, including medical tests, stationery, vegetables, and children's milk. Tax collection breakup The FBR missed its targets for sales tax, federal excise duty, and customs duty but again exceeded the income tax target on the back of over burdening the salaried class. According to the details, income tax collection amounted to nearly Rs5.8 trillion, Rs340 billion more than the target. It was also Rs1.25 trillion more than the last year. The burden was shared by the salaried class and the corporate sector, as the retailers and landlords still remained under-taxed. Sales tax collection stood at Rs3.9 trillion, nearly Rs1.03 trillion less than the target of over Rs4.9 trillion. The sales tax remained the most difficult area for the FBR and one of the reasons for low collection was less than estimated growth in large industries. The government had immensely increased the sales tax burden in the budget. The collection was Rs812 billion more than the last year. The FBR collected Rs767 billion in the federal excise duty, Rs187 billion less than the target. But it was Rs190 billion higher than the last year. The government did not spare homes, lubricants, fruit juices, cement, sugar etc from imposing the excise duty in the last budget. Yet it miserably failed to achieve the target. Custom duty collection stood at Rs1.28 trillion, Rs315 billion below the target. The collection was hit by lower-than projected import volumes. It was Rs173 billion more than the last year. The FBR paid Rs493 billion in tax refunds, which were Rs13 billion more than the preceding year.
Express Tribune
25-06-2025
- Business
- Express Tribune
Dairy sector shrinks 20% after GST blow
At high tax rates, profit margins for sellers decrease, leaving them with options to pass on the burden to consumers, compromise on the quality of products, evade taxes or find cheaper illicit goods. photo: file The government may have generated a revenue of Rs44 billion after the imposition of 18% General Sales Tax (GST) on dairy products in the last budget. However, this move has also resulted in a 20% drop in the production and sales of these products in Pakistan. Some key office-bearers of the Pakistan Dairy Association (PDA) on Tuesday told the media that since July 2024, investment of millions of dollars has stalled in the dairy sector due to rising production costs. Moreover, around 500 milk collection points — set up by dairy companies for purchasing milk from farmers — have also been shut down and 20% of the workforce has lost employment. PDA Chairman Usman Zaheer, CEO Dr Shehzad Ameen, Noor Aftab and other officials stated that over 100 developed and developing countries, including India, Bangladesh, Afghanistan, the US, and the UK, do not impose taxes on packaged milk. Where taxes are levied, the rate is usually around 5%. In response to a question, they said that before the 18% GST, the dairy sector was already contributing over Rs13.7 billion in revenue through income and super taxes. But in 2024, the sudden imposition of GST pushed the total tax revenue — income tax, super tax, and GST — up to Rs44 billion — a significant increase on the surface, but one accompanied by a dangerous decline in dairy product sales and production, which threatens the industry's sustainability. They warned that the decrease in dairy product sales will eventually reduce Federal Board of Revenue's (FBR) revenue collection and affect employment. They added that if the GST had been reduced, even higher tax revenues could have been achieved. The PDA admitted that there is a public perception that loose milk is safer than packaged milk but this is not true. In Pakistan 92% of the population uses loose milk, which poses serious health risks, while only 3% to 4% consume packaged milk. The association emphasized that taxation is a major challenge for this industry. Despite the obstacles, Pakistan's dairy sector has exported $35 million worth of packaged milk in the current fiscal year — double the amount compared to the previous year. According to the association, 45% of loose milk is unsafe, due to higher risks of bacterial contamination, whereas packaged milk meets international safety standards. The official said Rs1.3 trillion loose milk economy remains undocumented, which needs to be brought under the tax net. They also noted that Pakistan currently exports packaged milk to the Middle East, Africa, the US, and Central Asian countries, and efforts are underway to expand exports to China.
Business Recorder
25-06-2025
- Business
- Business Recorder
Dairy sector urges govt to reduce ST on milk
ISLAMABAD: The formal dairy sector has requested the government to reduce sales tax on milk from 18 percent to 5 percent, through amendments in Finance Bill (2025-26), which will grow volumes up to 20 percent and increase in revenue collection by 22 percent per annum. Pakistan Dairy Association (PDA) briefed media here on Tuesday that the reduction is crucial because since imposition of tax in July 2024, volumes have declined by 20 percent and governments expected revenue collection is not likely to be achieved. The remarks were made during a media briefing held in Islamabad, attended by representatives from Friesland Campina, Tetra Pak, and Nestlé Pakistan. The industry has offered to reduce the milk prices by Rs50 for consumers if sales tax is brought down from 18 to 5 percent in budget (2025-26). It also proposed a little tax on informal sector which is paying nothing in the form of taxes to the national kitty. The industry is paying 18 percent sales tax, 4 percent further sales tax, 2.5 percent advance withholding tax on sales to un-registered persons as well as Super Tax on direct taxes sides. The PDA argued that lower taxation would not only make milk affordable and safe for the public but also revitalize the formal sector, restore investments in farmer development, and increase government revenue. Speakers emphasized that milk is considered as a zero-rated, essential food item worldwide and in more than 100 countries it is either tax exempted or subject to very little taxation including Bangladesh, India, Europe, Egypt, Sri Lanka, Indonesia and many others. They claimed that even among countries backed by the IMF, Pakistan's 18% GST on dairy is highest in the world. Talking about the challenges faced by the dairy industry in Pakistan, Usman Zaheer Ahmad, Chairman PDA claimed that, 'Due to the current taxation 20% of workers have been laid off, processing facilities are running at less than 50% capacity. Now, there is a significant risk to the nation's $30 billion dairy export potential.' The formal dairy industry has experienced a 20% decrease in milk volumes since its implementation in July 2024, which forces the industry to purchase much less from farmers. This has caused 35% of registered farmers to enter the unregulated, informal milk trade and resulted in the closure of 500 milk collection centers. 'We used to invest Rs1.3 billion annually on farmer development. Today, that support is gone,' said Dr Muhammad Nasir, Head of Corporate Affairs Pakistan at Friesland Campina. Common households are being directly impacted by the tax; the cost of packaged milk has increased from Rs280 to Rs350 per litre, making it the most expensive food item in many households. The demand has decreased by more than 20% as a result. According to the experts, 91% of milk produced in the unorganized sector does not pass compliance inspections. Dr Shehzad Amin, CEO, PDA stressed that it is unsafe to consume half of the milk, in light of the pervasiveness of malnutrition, the safe milk is a fundamental right and needs to be kept within the means of low- and middle-income families. Experts brought to attention that despite the Punjab Pasteurization Act of 2017 in place, which requires safe milk practices, we do not see implementation. Noor Aftab, Director Corporate Affairs Pakistan and MENA, Tetra Pak, questioned the rationale behind taxing the only industry making an effort to maintain public health and regulate quality. Despite these challenges, Pakistan's dairy export potential remains high. In 2023, the country exported$15 million worth of dairy products. In 2024, exports rose to $35 million, primarily to the Middle East, Africa, and the United States. 'We are meeting global standards. The same products we export are sold locally. Yet, we face the highest utility costs, lowest scale, and the most punitive taxation,' stated Imran Husain, Deputy Managing Director, Friesland Campina. With a fair tax environment and consistent government support, PDA expects the potential revenue from a formalized milk sector could multiply exponentially. Copyright Business Recorder, 2025
Time of India
22-06-2025
- Time of India
Two arrested on charge of stealing 3 motorcycles in Nashik
Nashik: Nashik police have arrested two individuals and recovered three stolen motorcycles along with a cellphone, collectively valued at Rs1.3 lakh. The arrests were made on Saturday, as part of an ongoing effort to curb vehicle thefts. Tired of too many ads? go ad free now The accused have been identified as Rahul Prakash Kurhade (25) of Rahata in Ahilyanagar and Lakhan Shinde (24) of Phulenagar in Panchavati. Acting on guidance from commissioner of police Sandeep Karnik to prioritize motor vehicle theft cases, the detection branch of the Indiranagar police station launched an investigation. On Friday, the police received information that two individuals were planning to sell a stolen bike in the Pandavleni area. Soon a trap was laid and the accused duo got detained. During interrogation, the duo confessed to the theft of three motorcycles. One of the recovered motorcycles was stolen from the Indiranagar police station area, while another was taken from Kopargaon taluka. Police are currently investigating the origin of the third stolen motorcycle.
Business Recorder
16-06-2025
- Business
- Business Recorder
‘Fiscal obscenity'
EDITORIAL: At a time when millions are bracing for yet another round of inflation and fiscal tightening, the decision to multiply the salaries and perks of Pakistan's top lawmakers reads like a grotesque miscalculation. The increase — reportedly raising the monthly salary of the Senate chairperson and National Assembly speaker to Rs1.3 million, plus a Rs 650,000 sumptuary allowance — goes well beyond tone-deaf. It signals a fundamental detachment from the economic reality faced by the majority of people of this country. That Khawaja Asif, a senior minister from the ruling coalition itself, felt compelled to call the move 'financial obscenity' is telling. It suggests not just internal discomfort but a recognition — at least from some quarters — that the government has overstepped. Lawmakers are not salaried staff in the conventional sense. They are elected representatives, often already among the wealthiest segment of society in this Islamic Republic, who are expected to legislate and govern in the public interest — not negotiate the kinds of benefits that would shame most private executives. In any other context, the justification might have been couched in inflationary trends or revised compensation frameworks. But coming in the same week as a federal budget that made no provision for raising the minimum wage — and offered precious little in the way of substantive relief for working-class households — the decision smacks of institutional insensitivity. Worse, it exposes a political elite that appears to have insulated itself from the sacrifices it routinely demands of others. This isn't just about numbers. It's about optics, timing, and public trust. The image of parliamentarians quietly approving windfalls for themselves, even as families across the country tighten household budgets and slash essentials, is corrosive. It undermines whatever credibility remains in a system already seen as serving the few at the expense of the many. The public outcry was immediate, and justified. Social media users pointed to the contrast between this indulgence and the stagnant wages of ordinary workers. Labourers, clerks, and even low-grade civil servants have yet to see meaningful wage adjustments in years, despite surging prices and falling rupee parity. Fuel, power, education, rent — everything costs more. But somehow, only parliament has been spared the argument that there simply isn't room in the budget. And it bears repeating: these positions already come loaded with benefits — taxpayer-funded residences, staff, travel allowances, security details, discretionary grants, and access to institutional power. The base salary is hardly the full picture. That makes the case for further upward revision not only weak, but indefensible. Khawaja Asif may well be accused of political posturing, but his criticism cuts to the core of a broader structural rot. When politics is reduced to privilege, and when parliament resembles an exclusive club rather than a public institution, resentment festers. And, in a country already suffering from democratic fatigue, that resentment has consequences — political, social, and economic. If the government is serious about fiscal discipline, social justice, and institutional reform, it must reverse this decision. Not scale it back; reverse it entirely because this isn't a budgeting error. It's a moral failure. Copyright Business Recorder, 2025
