May Tax Revenues are down 31% YoY & infections rising – Brace for impact!

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Plunge is higher because of the base effect. Last year, the Eid holidays were in June, so we had a fully functional month of May.

This time it was a combination of Eid holidays, industrial, retail & services closure. The trend is obvious now after milder 13% YoY decline in April.

Talks on next NFC award need to begin. Provinces should be encouraged to take the risks & rewards. Electricity & gas losses should be relegated to provinces to avoid moral hazard/”pass the bucket”. Similarly, other PSEs should have their fat cut.

As incentive, “higher water-mark” should be given to provinces -in turn, districts- as X% on incremental Y% growth in tax revenues.

Budget should aim at rejuvenating economy. The earlier we get on the feet the better. SBP is (over) doing its bit to reduce financial bleeding of the pvt. sector & paving way to lower govt. borrowing cost.

Special emphasis needed on the sectors not paying taxes or fair taxes. Green shoots appear on curbing massive amount of smuggling through Afghan/Iran borders with the connivance of officials. Scores of undocumented economy operates in services sector: single digit tax in cascading format please.

Govt. frets tax mess, awaam fears infections.

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