Islamabad: The All Pakistan Business Forum (APBF) has expressed deep concern over Pakistan's widening fiscal gap after the Federal Board of Revenue (FBR) missed its first-quarter revenue target by Rs198 billion, terming it a wake-up call for structural tax reforms and decisive policy action.

According to official data, the FBR collected Rs2.885 trillion during the July-September quarter of FY2025-26, against the target of Rs3.083 trillion. The shortfall also fell Rs138 billion below the IMF's benchmark of Rs3.023 trillion, underscoring persistent weaknesses in the country's revenue system despite repeated reform initiatives.

APBF President Syed Maaz Mahmood said the figures clearly show that temporary measures and tax rate adjustments cannot bridge the fiscal gap. 'Pakistan's issue is not the absence of taxes but the absence of a fair, enforceable, and efficient system,' he remarked. 'Each year, we set higher targets, but without expanding the tax base and ensuring equitable compliance, shortfalls will continue.'

A breakdown of FBR's data revealed that income tax collection stood at Rs1.363 trillion, falling Rs96 billion short of the target. Sales tax receipts reached Rs1.02 trillion, missing by Rs122 billion, while federal excise duty slightly exceeded expectations with Rs190 billion, surpassing its goal by Rs2 billion. Customs duty, however, performed better, collecting Rs312 billion-Rs17 billion above the target. Despite this, overall revenue growth of around 11-13 percent remains well below the 20 percent increase required to meet the annual goal of Rs14.13 trillion.

APBF Chairman Ibrahim Qureshi expressed disappointment over the performance, despite substantial funding for FBR's modernization and automation programme. 'We were promised digital transformation, yet inefficiencies, litigation delays, and administrative loopholes persist,' he said. He emphasized that transparency, accountability, and simplification must form the basis of rebuilding the FBR's credibility and capacity.

Qureshi further noted that income tax return filing remained sluggish, with just over 4 million returns filed by September 30, compared to 7.7 million in the previous tax year, prompting the FBR to extend the filing deadline by 15 days. Mahmood added that compliance cannot improve when honest taxpayers are overburdened while untaxed sectors remain exempt.

Reiterating APBF's long-standing stance, Maaz Mahmood urged the government to end amnesty schemes, bring all income sources-including agriculture, real estate, and retail-into the tax net, and reduce dependence on indirect taxes that fuel inflation. 'Fiscal stability cannot rest on a handful of compliant taxpayers while others continue to evade,' he said, adding that Pakistan needs a progressive, growth-oriented system that supports entrepreneurship instead of stifling it.

Concluding his remarks, Mahmood said Pakistan's economic revival hinges on collective political will and institutional reform. 'We are not short of policies; we are short of implementation,' he warned. 'Unless the government takes bold, time-bound measures to reform the tax system, Pakistan will continue missing IMF targets and remain trapped in cycles of borrowing, austerity, and stagnation.'