The International Monetary Fund has demanded more tax collection from provinces and imposition of the agriculture tax.
Official sources said that the IMF has urged for imposition of tax on the agriculture income adding that the farm sector was paying low tax in Pakistan over its share of income.
The monetary fund has also advised the government to use the national tax council for enhancing provincial taxation. “The province’s tax share in national revenues has been at the minimal level of one percent,” IMF has pointed out.
The IMF has also demanded full tax collection on properties in as well as sales tax on services in provinces.
The International Monetary Fund earlier demanded Pakistan to public assets of office holders, government officials, ministers, and parliamentarians.
According to sources, the IMF has suggested strict anti-corruption measures in the upcoming budget 2024.
The monetary fund directed the government to establish a portal to declare assets of public officials, but the government has failed to do so, sources said.
Pakistan’s authorities are bound to create a portal and disclose asset details under the agreement with the IMF, sources added. The government had prepared a Performa for officials to disclose their assets, but it was not made public, sources revealed.
Furthermore, banks will now be required to obtain assets information from government officials when opening new accounts.
Meanwhile, Pakistan and the International Monetary Fund are still grappling with several key issues as they negotiate the terms of a new loan program.
According to sources within the Finance Ministry, disagreements persist on tax exemptions for former FATA (Federally Administered Tribal Areas) regions and the tax treatment of various income groups.
A major sticking point appears to be the continuation of tax breaks for Pakistan’s former FATA territories. While the IMF pushes for their immediate removal, the Finance Ministry argues that a one-year extension is crucial to support development efforts in the region. This includes tax breaks on imported machinery and income tax relief.
One area where progress has been made is income tax on exporters. Both sides have reportedly agreed to a revised system that calculates taxes based on exporters’ income and expenses, replacing the current flat rate of 1%.
