The federal government is poised to unveil the highly anticipated Rs.18.5 trillion budget for the fiscal year 2024-25 today, aiming to secure a new bailout from the International Monetary Fund (IMF), according to a report by The News.
Finance Minister Muhammad Aurangzeb will present the budget in the National Assembly, with the ministry having completed its preparations for the announcement.
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This budget release follows the government’s recent announcement that the expected economic growth of 2.4% for the current year will fall short of the 3.5% target, despite a 30% increase in revenues over the previous year and controlled fiscal and current account deficits.
The government is expected to set the Federal Board of Revenue’s (FBR) tax collection target at Rs12.97 trillion for the next fiscal year, up from the revised estimate of Rs9.252 trillion for the outgoing financial year.
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The FBR had previously adjusted the tax collection target downwards to Rs9.2 trillion from the initial Rs9.415 trillion target approved by parliament in the last budget for 2023-24.
In pursuit of fiscal consolidation, the FBR aims to reduce the overall fiscal deficit from over 7.6% of GDP in the outgoing fiscal year to 6.5% in the next budget, through increased revenue efforts and curtailing excessive expenditures.
Significant efforts will be focused on Inland Revenue (IR), including income tax and GST, to achieve increased revenues of Rs1.7 trillion and Rs1.3 trillion, respectively, through nominal growth, effective enforcement, and extensive taxation measures.
Out of the Rs12.97 trillion annual tax collection target for the next budget, the FBR anticipates collecting Rs5.512 trillion through direct taxes, including Rs5.45 trillion in income tax, Rs4.919 trillion in sales tax, Rs0.948 trillion in federal excise duty, and Rs1.591 trillion in customs duty.
To broaden the narrow tax base, the IMF recommends accessing detailed data on taxpayers, including their socio-economic characteristics and the taxes they owe and pay. Access to taxpayer-level data from the revenue administration is crucial for this objective. Additional data from national statistical agencies, business surveys, social security information, and property records will also be necessary, depending on the analysis conducted by tax policy units (TPUs).
Establishing data-sharing arrangements between TPUs and government bodies must consider privacy and confidentiality concerns.
The FBR will need to leverage technology to manage, store, and analyze large volumes of data. The government will also aim to reduce expenditures through pension reforms, subsidy cuts, and managing the costs of State-Owned Enterprises.
With a total outlay exceeding Rs18.5 trillion for the upcoming budget, the government must mobilize both tax and non-tax revenues, as well as manage expenditures efficiently.