- Authorities say the International Monetary Fund will send its team to Pakistan in December.
- The FBR may propose to raise withholding tax rates on all imports.
- Raising the withholding tax on the sale of land plots and also purchases with cards.
ISLAMABAD: The incumbent government is left with no other option but to consider implementing additional revenue measures in the form of smaller budgets or cutting expenditures amid the failure of the Federal Bureau of Revenue (FBR) to achieve its tax targets. News reported on Sunday.
The International Monetary Fund (IMF), although not confirmed, may send its mission to Islamabad any time in the coming weeks, with Pakistani authorities saying the lender’s team will visit the country next month (December 2024).
However, insiders insist that the IMF team may prefer to attend any time soon.
A decree has been drafted and is likely to be presented to the Federal Cabinet soon. This decree is expected to be issued during the current month.
Senior FBR officials claim that the proposed decree may implement strict enforcement measures such as freezing bank accounts, banning the purchase of land plots or vehicles or other steps.
“The FBR may propose to raise tax rates on all imports, increase tax rates on sale and purchase of real estate and some other increases in tax rates,” senior official sources confirmed the publication the previous day.
There is still an option for economic managers to maintain pressure on the development budget in the form of the Public Sector Development Program (PSDP).
In the first quarter (July-September), utilization stood at just Rs22 billion, despite a revised allocation of Rs1,100 billion for the entire fiscal year 2024-25.
The RBI faced a revenue shortfall of Rs 189 billion in the first four-month period (July-October) of the current fiscal year and concerns have been growing that the tax mechanism will continue to face a deficit in the first six-month period (July-December) of the current fiscal year. Current fiscal year.
The revenue projections conducted by the RBI showed that there could be a deficit of Rs 321 billion in the first six months, leaving no other option but to consider a mini-budget to align the fiscal framework with the IMF agreement.
It is still possible for the government to satisfy the IMF by cutting expenditures, but the Ministry of Finance will not be happy with any such proposal.
In a meeting held a few days ago chaired by the Minister of State for Finance and the Finance Ministry, the Finance Ministry heads were upset and dissatisfied with the revenue forecast of a tax deficit of Rs 321 billion, expected in the first half of the current fiscal year. year. If the tax deficit widens, the Ministry of Finance will be forced to reduce its runaway expenditures.
“The Pakistani team will be walking a very tight rope because if the revenue measures of raising tax rates are approved, it could cause the economy to contract further,” an official said, arguing that demand in the economy had already been suppressed and further contracted. High tax rates would further stifle economic activities.
When the TV channel aired these stories, the FBR spokesperson in his official statement on Saturday stated that some news channels aired a completely baseless and false story that the IMF had rejected FBR’s request to review the targets.
“It has been completely denied that any such meeting with the IMF on this topic was held. This topic was never on the agenda of any of the meetings, virtual or otherwise, with the IMF.
“Therefore, the FBR not only rejects the news but also advises the national media to refrain from such false stories that may adversely affect national interests,” he said.
