Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin on Friday said the government will not impose any new taxes in the upcoming ‘mini budget‘, but it will withdraw some tax exemptions given to various sectors to increase revenue.
Talking to media persons in Karachi, the finance adviser said that as per an agreement with the International Monetary Fund (IMF) reached in March this year, the government had agreed to generate Rs700 billion in taxes to receive the third tranche under the IMF loan programme.
“When I became the finance minister, I had said we will not increase taxes. We will not allow [the IMF] to impose more taxes on people who are already paying them.”
During the talks, the finance ministry did not agree to more taxation, he said, adding that the government convinced the IMF to bring down the revenue target to about Rs300b.
Tarin said the IMF had asked Pakistan regarding the tax exemptions which ‘distorted’ the tax system and added that the fund’s arguments were valid on such exemptions.
The finance adviser said the IMF asked Pakistan to give ‘targetted subsidies’ with an across-the-board sales tax rate of 17 per cent. “They say, ‘you [Pakistan] have imposed 17 per cent sales tax on some [sectors], zero on some and 10pc on some’.”
He also questioned the gas subsidy to the fertilizer industry that amounted to Rs150 billion and said the government did not impose taxes on the sector either, questioning if the move was benefiting the farmers as well?
The government will provide direct subsidies to farmers through the Ehsaas database, he said hinting at an end to subsidies for the fertiliser sector.
Tarin had said once all the conditions were met, the IMF board would meet in January to approve the sixth review of the economy.
“The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the 6th review under the EFF,” the IMF statement had said.