While again ruling out a mini-budget, Prime Minister Shehbaz Sharif has directed to seek speedy decisions in pending tax cases in the Supreme Court of Pakistan and also improve enforcement to recover the revenue shortfall of Rs386 billion.

Government sources told The Express Pakinomist that the prime minister held at least two meetings this week — the latest on Friday — on the issues of the Federal Board of Revenue. He also took updates on the appointment of members of the appellate courts and the pending litigations with the aim of finding a way out of the quagmire of growing revenue shortfall, the sources said.

The prime minister was also informed that the fiscal deficit may be further widened as there were chances that the FBR could also miss the Rs957 billion target set for the month of January, the sources said.

During one of the meetings, the prime minister directed to step up enforcement to recover at least Rs 400 billion out of the expected tax gap of Rs 7.2 trillion to meet the revenue shortfall in the July-December period, the sources said.

They said the Prime Minister once again stated that no additional burden would be placed on the tax payers and that the FBR should redouble its efforts, especially after he approved new cars and increased the financial packages of employees.

The Ministry of Finance informed the Prime Minister during the meeting that the Ministry has released the budget for the FBR purchases. However, the FBR sources said that the finance ministry has not fully disbursed all the required funds.

Last month, the FBR chairman had briefed the press that the tax gap – the amount that the FBR should recover but is still not collected – has been expected to widen further to Rs 7.1 trillion by the end of this financial year – a increase of Rs 900 billion within a year.

Rashid Langrial had said the difference due to VAT amounted to Rs4.1 trillion, followed by Rs2.1 trillion in income tax and Rs600 billion due to customs duties.

The government targeted 186,000 top tax evaders and the companies to reduce the gap. However, the FBR could get only Rs 378 million from 38,000 top potential income tax payers who filed the returns in response to tax notices.

The FBR has boasted that the tax-to-GDP ratio rose to 10.8% in December, slightly higher than the IMF’s target of 10.6%.

However, the ratio of 10.8% is only for the second quarter (October-December). The average tax to GDP ratio in the first half of the financial year was 10.2%, which was below the IMF target.

The FBR worked out the tax rate on the basis of an economic growth rate of 2.75% for this financial year. The growth rate in the first quarter remained at just 0.9% instead of the 3% assumed for this financial year.

Economic growth remains subdued due to generally tough economic conditions.

The prime minister asked the FBR to request the IMF to review the performance of the tax machinery in view of the improvement in the tax-GDP ratio, the sources said. The Prime Minister is not in favor of adding more burdens, and he recognizes the negative impact of heavy taxation on personal incomes and businesses.

However, the prime minister has yet to do anything to ease the burden on the salaried class, which is the worst-hit section of society due to the taxation introduced by Prime Minister Shehbaz Sharif in June.

Meanwhile, the Prime Minister directed the Attorney General of Pakistan to seek speedy resolution of the pending cases in the courts to recover some of the tax deficit. Taxpayers have challenged many controversial taxes in the courts, including the collection of taxes on real estate that is a provincial subject. The companies have also challenged super tax and the capital gains tax.

The FBR has estimated that at least Rs 100 billion can be recovered if these cases are decided this financial year.

While the government blames the courts for a delay in the decision, various court orders suggested that it was the FBR that was not actively pursuing the cases.

The FBR’s legal counsel last month sought an adjournment in a tax case of M/s Pioneer Cement Limited versus the federation pending since 2021, the court order showed.

“The Federation and the FBR have constantly agitated the issue of pendency of tax cases before the respective High Courts. Although such a complaint is repeated again and again, the order herein immediately shows the disinterest even in proceeding with tax cases before this court”, reads the order of 20. December 2024.

Similar orders have also been passed by the Singh High Court in two other cases, Faisal Rahim Saya v. Union and M/s Techno Fabrics Private Limited v. Union. These orders were passed last month after the FBR sought adjournments in the cases pending since 2020-21.

Earlier, the Prime Minister had suspended the taxmen for not actively pursuing legal cases, but now the Prime Minister does not appear to be taking any action either.

Prime Minister Shehbaz Sharif on Friday directed to appoint talented manpower in the appellate courts to ensure speedy disposal of litigations related to FBR’s revenue. The prime minister asked to look into the possibility of headhunting to appoint members of the appellate courts after the government failed to attract the best talent during a recent exercise.

The Prime Minister said that people of international caliber should be recruited in the courts and offer them competitive salaries and perks commensurate with their professional capabilities.

Muslim World League

Prime Minister Shehbaz Sharif on Friday praised the Muslim World League’s (MWL) support in promoting the true identity of Islam at the global level, advocating the common goals of the Muslim world and promoting mutual respect and understanding between religions, faiths and cultures.

The Prime Minister made the remarks during a pay call by the Secretary General of the Muslim World League, Sheikh Dr. Mohammad bin Abdulkarim Al-Issa here at the Prime Minister’s House, said a press release from the Prime Minister’s Office.

He thanked the MWL Secretary General for the decision to establish Sirat Museum in Pakistan and emphasized the country’s vision to continue working for early completion of joint projects, especially the establishment of Sirat Museum.

The Secretary General thanked the Government of Pakistan for the comprehensive arrangements for the International Conference on Girls’ Education in Muslim Countries and the cooperation with MWL in this regard.

With additional input from APP