- Authorities say IMF will send its team to Pakistan in December.
- FBR may suggest raising withholding tax rates on all imports.
- Hiking of withholding tax on plots’ sale, purchase also on cards.
ISLAMABAD: The incumbent government has been left with no other option but to consider implementing additional revenue measures in the form of mini-budgets or cutting down expenditures amid the Federal Bureau of Revenue’s (FBR) failure to achieve its tax targets, The News reported on Sunday.
The International Monetary Fund (IMF), although not confirmed, may send its mission to Islamabad anytime in the coming weeks with Pakistani authorities saying that the lender’s team would visit the country next month (December 2024).
However, insiders insist that the IMF team might prefer to come anytime soon.
An ordinance has been drafted and is likely to be presented before the federal cabinet soon. It is expected that the ordinance may be promulgated within the ongoing month.
The FBR high-ups claim that the proposed ordinance might implement stringent enforcement measures such as freezing bank accounts, and banning the purchase of plots, vehicles or other steps.
“The FBR may propose raising withholding tax rates on all imports, hike withholding tax rates on sale and purchase of properties and some other hikes in tax rates,” top official sources confirmed the publication a day earlier.
There is still an option for the economic managers to further squeeze the development budget in the shape of the Public Sector Development Programme (PSDP).
In the first quarter (July-September), utilisation was standing at just Rs22 billion, despite having a revised allocation of Rs1,100 billion for the whole financial year 2024-25.
The FBR faced a revenue shortfall of Rs189 billion in the first four months (July-October) period of the current fiscal year and apprehensions were rising that the tax machinery would continue facing a shortfall in the first six months (July-December) period of the current fiscal year.
The forecast of revenue undertaken by the FBR showed that there might be a shortfall of Rs321 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 can be still the discretion of the government to satisfy the IMF by cutting down the expenditure but the ministry of finance would not be happy with any such proposal.
In a meeting held a few days ago under the minister of state for finance and secretary finance, the finance ministry bosses were upset and unhappy over the revenue forecast of a tax shortfall of Rs321 billion, expected to occur in the first half of the current fiscal year. If the tax shortfall widens, then the ministry of finance would be forced to curtail its unbridled expenditures.
“The Pakistani team will be walking on a very tight rope because if the revenue measures in the shape of hiking tax rates get a nod, it might further shrink the economy,” said an official arguing that the demand in the economy had already suppressed and tax rates hikes would further suffocate the economic activities.
When the television channel aired the stories, the FBR spokesman stated in its official statement on Saturday that some news channels aired an absolutely baseless and false story stating that the IMF had rejected the FBR’s request for revision of targets.
“It is outright denied that any such meeting had taken place with the IMF on this subject. Nor this subject has ever been 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 fake stories, which might affect the national interests adversely,” he said.
