ISLAMABAD, NOV 9 (DNA): Finance Minister Muhammad Aurangzeb has lamented an existing credibility gap with the International Monetary Fund (IMF) affecting Islamabad’s relations with the Washington-based lender.
Talking to reporters in Islamabad, Aurangzeb said the country faced a trust and credibility gap in the eyes of the Fund because what was uttered and committed, was not implemented fully.
His remarks come as Prime Minister Shehbaz Sharif-led government has begun preparations for high-stakes discussions with the lender next week amid the Federal Bureau of Revenue’s (FBR) tax shortfall of Rs189 billion in the first four months of the current fiscal year.
Confirming that the IMF team will be visiting Pakistan for stocktaking of the existing situation, the finance czar noted that the government fetched the desired revenues from retailers and wholesalers envisaged for the first quarter (July-September) period of the current fiscal year.
The minister said the IMF endorsed the electricity winter package as nothing of this sort was done without the approval of the Fund.
The structural benchmark and other quotative targets were signed but never fell through with the IMF, he maintained.
Commenting on the privatisation process, Aurangzeb said: “The government cannot run PIA so it will again try to privatise it. The button of privatisation will be switched on again”.
Meanwhile, on the tax issue, it is yet to see how the IMF will respond to the government’s claim that the retailers and wholesalers deposited tax revenues of Rs10 billion during the first quarter but the retailers under Tajir Dost Scheme (TDS) paid just peanuts.
In the budget for 2024-25, the FBR increased the tax liabilities for wholesalers and distributors under income tax obligation in case of selling products to non-filers and the rate was jacked up ten times. It forced wholesalers and retailers to pay an increased amount of Rs7 to Rs10 billion.
Will the IMF accept it as tax payment under TDS is not yet known, said the sources. He said that all four provincial cabinets granted their nod for implementing Agri Income Tax and it would be in place from January 1, 2025, but collection would kick-start from next fiscal year.
Additionally, the finance minister said that he did not buy the argument that the real estate resulted in boosting 40 industries. He said that the government would have to bring real estate, retailers and agriculture income into the tax net because the saturation point had already touched for getting maximum tax rates from salaried and manufacturers in the range of 45 to 50%.
Can we further jack it up to 60%? The answer lies only in expanding the narrowed tax base and then rationalising tax rates for all others, he added. He said he had paid income tax as a salaried person which would be made public under the declaration of assets and income as parliamentarians.
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