ISLAMABAD - Pakistan has assured the International Monetary Fund (IMF) on Wednesday to bring a mini budget to achieve the annual tax collection target during the current fiscal year. The talks between Pakistan and IMF continued for the second day in Islamabad on Wednesday. According to officials, the IMF review mission head Nathan Porter, during the talks, expressed concerns that the opposition might create hurdles in the way of implementing tough economic decisions, urging the government to meet all the ‘requirements’ for the completion of the much-delayed programme review. He raised the question about the implication of the opposition’s role in difficult decisions that Pakistan would have to take to avoid the default.
The officials informed that both the sides have discussed the tax related issues. The government has assured the Fund to achieve the annual tax collection target of Rs7.4 trillion. Both the sides have also discussed the mini budget. The Fund has asked to withdraw the tax exemptions in various sectors. An official said that the IMF has asked to impose General Sales Tax (GST) on oil products. The official further said that the Federal Board of Revenue (FBR) has drafted proposals of new taxation measures of nearly Rs300 billion to be enforced through the promulgation of the Tax Laws Amendments Ordinance, 2023. The sources quoted the IMF mission chief as saying that the fund had concerns that the opposition might create some problems in the way of rolling out additional taxation measures that the government was planning to impose to revive the talks. The revenue impact of the proposed withholding tax on banking transactions of nonfilers is nearly Rs45 billion. The three percent flood levy could generate additional revenue of Rs60 billion. The proposed increase in the rates of capital value tax rates on imported and locally assembled vehicles has been estimated to generate an additional revenue of Rs10 billion. The proposal to impose tax on banks’ foreign exchange income has been estimated to generate Rs20 billion. The proposal to raise the Federal Excise Duty (FED) on sugary drinks would generate Rs60 billion. The proposed impact of further raise in the FED on cigarettes has been estimated at Rs25-30 billion. During the talks, the finance minister assured the IMF mission head that the government believed in political dialogue, the sources said. Dar stated that the government would try to enforce additional taxes in a manner that would avoid any untoward legal and political challenges, the sources added. The government was planning to promulgate a presidential ordinance but in case the IMF concerns remained, it might bring an act of parliament. The IMF mission chief urged the Pakistani authorities that they needed to do a lot to fulfil the programme’s commitments. “Nathan Porter expressed his confidence that the government will meet the IMF requirements for the completion of the 9th review. Porter hoped that Pakistan would continue towards its progress on the reforms in various sectors and complete.