- The tobacco industry urges the reduction of the reduction of the FIM to the IMF team.
- The trade in illicit cigarettes causing an annual loss of RS300BN.
- Cases awaiting Hope FBR will increase tax collection.
Islamabad: The International Monetary Fund (IMF) projected a deficit of 490 billion rupees in the annual target of annual recovery of the Federal Board of Revenue (FBR), estimating income to reach 12,480 billion rupees instead of the RS12 970 billion planned rupees.
This evaluation puts the government in a difficult situation, requiring discounts of expenditure or new tax measures to fill the tax gap, The news reported Thursday.
From now on, the Ministry of Finance would receive two IMF options – either to reduce the expenses in proportion to tax correspondence to avoid climbing the budget deficit after projected a income deficit or take additional income measures in the form of a mini -buin on an immediate basis.
It will be the government’s choice to make an appropriate decision in the next talks in terms of politics, which will start between the two parties next week.
The tobacco industry requires a 25% reduction in the Fed
Meanwhile, representatives of the Pakistan tobacco industry informed the IMF examination mission on Wednesday, recommending a 25% reduction in the federal excise function (Fed) and the introduction of a third level of tax due to the drop in volumes and income.
In their presentation, industry representatives have stressed that the Fed had increased by 254% in recent years, which has led to a drop in volumes and income from the taxpayer cigarette.
The industry noted that the tax collection of FBR of tobacco was RS148 billion during the financial year 2021-2022, but after several hiking cycles, the collection increased to 277 billion rupees in 2023-24.
Despite this temporary increase, industry representatives have projected a significant slowdown, providing that revenues would fall to Rs243 billion by June 2025 and would still decrease to Rs235 billion by the year 2025-26 and 223 billion rupees by 2026-27.
On the volume side, the share of the tobacco industry, which was 55 billion blows on 80 billion in total in 2021-2022, was also affected by the increases in the Fed.
The volume of tax cigarettes was constantly decreasing and has now touched the lowest reflux with 33 billion sticks in 2024-25.
This drop in volume was moved to illicit cigarettes, resulting in a loss of income of 300 billion rupees or $ 1.1 billion in the national treasury.
FBR apprehensions
The High-Ups FBR expressed their apprehensions that if the proposal obtained the assent of the IMF and the Government, the FBR could be faced with a touch of income of 50 billion rupees, arguing that the manufacturers of tax exemption have invested in the market.
The FBR had set an annual ambitious annual tax objective of RS12 970 billion, but during the first eight months of the financial year, the board of directors is already faced with a income deficit of 604 billion rupees.
During discussions with the IMF, FBR officials insisted that they would achieve the objective, citing the regulation of income affairs in the higher judicial system as a key factor in the gap committee.
After numerous deliberations, however, the IMF revised its projections, believing that the FBR income collection could not exceed RS12 480 billion, with challenges planned in the last quarter (April to June 2025).
The Ministry of Finance is now faced with a critical decision, either reduces public spending by RS500 billion, or implement additional income measures to mitigate the deficit.