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IMF lauds FBR’s efforts to broaden tax base, asks to ‘do more’

IMF lauds FBR’s efforts to broaden tax base, asks to ‘do more’

ISLAMABAD: The International Monetary Fund (IMF) has emphasised need for Pakistan to broaden its tax base to enhance revenue collection and help control soaring budget deficit.

With primary focus on containing fiscal deficit, Pakistan and the IMF on Monday began policy discussions on economic and fiscal adjustments required to ensure a fresh fund programme worth around $6 billion.

Sources said Finance Ministry, State Bank and FBR held discussions with visiting IMF delegation. The FBR briefed them on measures to broaden tax base and increase collection.

The Fund was informed that FBR had issued notices to hundreds of non-taxpayers recently. It was also told government had recently started action against tax evaders who had purchased properties of over Rs20 million, or purchased 1800 CC or larger engine cars, or received rent to the tune of Rs10 million or more in a year but not bothered to file their tax returns.

The drive for the recovery of tax from these big tax evaders is being launched across Pakistan without any discrimination.

Sources added that IMF appreciated FBR’s efforts to broaden the tax base. However, the delegation stressed that efforts should be accelerated to enhance tax collection, which would help the government in controlling the budget deficit of the country.

The fund is reported to have raised questions over more than Rs90bn revenue shortfall in the first four months of the current fiscal year and wondered how the projected fiscal deficit target of 5.1pc could be achieved when development programme had already been curtailed to a bare minimum.

They also asked questions about the revenue measures under consideration as to make up for the loss suffered so far and what was the policy plan going forward.

The officials of Ministry of Finance informed the delegation about its strategy to control the budget deficit. The visiting delegation was told that government had recently announced mini-budget to restrict the budget deficit at 5.1 percent of the GDP. Otherwise, the deficit would have to go beyond 7.1 percent of the GDP.

Finance Minister Asad Umar was tentatively scheduled to join the policy level discussions on Tuesday that would continue until the end of this week (until Thursday, December 15) in which the fund would separately meet the ministers and secretaries of the ministries of commerce, power, petroleum, privatisation, chairman FBR and the governor of the State Bank of Pakistan.

The two sides would break the dialogue for the weekend to prepare their respective positions and view point on the bailout package. This would be followed by two-day crucial negotiations on finalising terms and conditions of the new programme, including size, tenure and disbursement mechanism on Nov 19 and 20.

He said the two sides had been engaged in data sharing since the IMF staff mission reached Islamabad last week and separately met all the relevant authorities.