IMF calls for do-more to increase tax revenue

IMF demands do-more to increase tax revenue, the inside story of talks between IMF and Pakistan’s economic team has come out.

In the first round of negotiations with the IMF, issues related to taxation were reviewed.

According to sources, the IMF demanded an early end to the special tax regime for the construction sector, while the discretionary power of the FBR and Cabinet to grant tax incentives to industrial establishments has also been demanded.

Sources said the IMF advised that future tax incentives should be subject to a regular assessment of costs and benefits.

The IMF also suggested bringing non-profit organizations into the tax net.

According to the sources, IMF demanded extension of TOR of National Tax Council and harmonization of tax rates in TOR of National Tax Council.

According to the sources, the expansion of agricultural income and property tax base was also demanded to be included in the National Tax Council’s TOR.

The IMF also called on the federal government to increase cooperation with provincial governments, which would enable provincial governments to collect taxes and enforce provincial tax laws.

According to sources, the IMF recommended setting up a tax policy unit in the finance ministry, preparing an MoU and protocol for data exchange with the FBR and other institutions.

According to sources, Benazir Income Support Program (BISP) officials briefed the IMF on the new banking model for disbursements to 9.3 lakh victims under the sponsorship programme.

The briefing informed that the new payment system of BISP will save 2 billion rupees annually, the involvement of more banks will create transparency and convenience in the payment process.