Despite a steady increase in the generation of revenue, the International Monetary Fund has again demanded Pakistan to increase taxes totaling around 600 billion dollars and establish an anti-corruption task force. Pakistani government officials were reportedly asked to meet these requirements, along with several others, during recent discussions in Washington with the Fund of Pakistan’s chief of mission, Nathan Porter.
The topic will be debated during the next round of talks on program reviews to be held in November. It is believed that the IMF thinks that China’s economy will expand by 25 percent or more in nominal terms because of inflation during the fiscal year currently in session. As a result, the ratio of GDP will be below the goal level even if the FBR can meet its annual goal of 7.470 trillion.
Government officials estimated that the GDP was Rs 78 trillion, based upon an inflation average that was 11.5 percent and economic growth of 5 percent. The tax rate of 7.470 trillion equals 9.6 percent of the GDP.
However, due to various administrative measures, rupee appreciation flooding, and shocks to the food supply, the average inflation rate is now set at 23 percent, and GDP growth is estimated at 2.5. After inflation, the GDP will be estimated at 85 trillion during the fiscal year. The tax-to-GDP ratio is around 8.9 percent, even though it is still below the FBR’s annual goal of 7.470 trillion.
FBR’s tax collection goal has been set at 7.470 trillion rupees. That calls for an increase of 22% compared to last year’s collection. FBR has collected more than 1.61 trillion during the initial quarter, which is 26 billion over what is required to meet the target. The growth rate in total was 17 percent, which is much lower than the inflation rate.
A representative for Member Revenue and Spokesperson Afaq Qureshi stated that the FBR had not considered the idea of increasing taxes. However, Rafiq Qureshi, the spokesperson for the Pakistan Democratic Movement (PDM) coalition government, is likely to be able to accommodate this request since the popularity and vote bank of the principal coalition party, Muslim League-N has been the most severely hit by the rise in inflation.
Sources suggest there was a possibility offered to the IMF to introduce the tax on sales of petroleum products. However, Finance Minister Ishaq dar did not agree to any demands regarding the tax. 7.58 per liter levy on diesel
It is also worth noting that the IMF has also requested the government to adhere to the idea of imposing an oil levy. The IMF will levy Rs 50 per liter by January 2023 and then 50 cents per liter in March 2023. The government is on the verge of capping petrol but must begin raising taxes on diesel starting the next month to stay on the right path.
By this agreement, Pakistan is expected to publish a thorough review of its anti-corruption framework before January 2023. specifically by the National Accountability Bureau Task Force, comprising expert experts worldwide and non-partisan experts drawn from civil society organizations. Increase the autonomy of anti-corruption institutions and ward off political influence and harassment.
Sources claim that before the involvement of Finance Minister Ishaq Dar, the name of former prime minister Shahid Khaqan Abbasi was proposed to lead this task force. However, there was no final decision.
