During the previous fiscal year, the Pakistan Tehreek-e-Insaf (PTI) administration gave away a record Rs1.76 trillion in tax exemptions to the wealthy and foreign investors, bringing the total cost of such exemptions to Rs5.2 trillion in four years.
Even though the PTI administration withdrew roughly Rs300 billion in tax exemptions in January this year, the cost of tax exemptions increased by 34%, or Rs443 billion, in just one year, according to the 2021-22 report. It was the most concessions ever granted in a fiscal year.
Over four years, the previous government granted Rs5.2 trillion in tax exemptions, accounting for 87 percent of the expected tax collection by the Federal Board of Revenue (FBR) in the previous fiscal year.
The previous administration likewise gave tax breaks to the military’s economic interests.
According to the Economic Survey, which Finance Minister Miftah Ismail released on Thursday, “the tax expenditure for the fiscal year 2022 has been forecast at Rs1.757 trillion” due to income tax, sales tax, and customs duty concessions.
The government may present an Rs9.45 trillion budget, which will be funded by fresh debt worth Rs4.5 trillion.
Every program Pakistan has signed with the International Monetary Fund has included the removal of tax exemptions (IMF). Nonetheless, each subsequent government has not only succeeded to protect the wealthy but has also managed to add additional individuals to the list of recipients.
In the current fiscal year, the FBR is set to collect Rs6 trillion in taxes, with the government recovering the remaining Rs1.76 trillion, bringing the total tax collection to Rs7.76 trillion. The borrowing requirement would have been decreased by the same amount.