IMF Expresses Deep Concern Over Tax Revenue Shortfall and Proposes Emergency Tax Measures; Conditions Likely to Become More Stringent in Upcoming Economic Reviews
ISLAMABAD: International Monetary Fund (IMF) has expressed serious concern on increasing tax revenue deficit and urged Pakistan to take immediate remedial measures to fill the tax revenue gap.
The IMF has called for emergency tax measures to compensate for a Rs 129 billion tax revenue shortfall in October and a Rs 96 billion deficit in the first four months of the fiscal year, to help achieve the target of collecting Rs 15.264 trillion in taxes this year.
The following are key highlights of IMF’s Tax Revenue Concerns and Recommendations:
New taxes or government spending cuts: If the tax shortfall continues to widen, consideration will be given to imposing new taxes to the public or implementing stringent cuts on government spending, according to sources of the Federal Board of Revenue (FBR). The terms of loan programs will be tightened significantly in the next economic review, officials said.
Broadening the Tax Base – IMF has strongly urged to raise the tax-to-GDP ratio and to collect at maximum possible level of General Sales Tax (GST) at the federal and provincial levels, because current tax revenues are not adequate.
Rethink Untaxed Sectors: Before the next budget, the IMF has suggested to make real progress in the collection of taxes from retail, wholesale and agriculture – and to put high-net-worth professionals and other out-of-net segments on the tax rolls – in order to meet the $7 billion loan programme’s structural benchmarks.