IMF flags tax shortfall, proposes emergency measures for Pakistan
The IMF has expressed concern over a decline in Pakistan's tax revenue and proposed emergency measures if targets keep being missed. Sources say the shortfall was Rs129 billion in October.
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- IMF flagged a Rs129 billion shortfall in October, according to sources
- Annual tax collection target is Rs15,264 billion
- IMF wants retail, wholesale, agriculture and professionals brought into the tax net
- Finance minister of state says action will follow against unregistered shopkeepers
The International Monetary Fund has asked Pakistan to make up its tax revenue shortfall and has proposed emergency tax measures if collection targets continue to be missed, according to reports by Express News and TechJuice citing sources.
Sources said the lender flagged a shortfall of Rs129 billion in October. The gap for the first four months of the fiscal year was put at Rs96 billion.
The IMF has urged the government to achieve the annual collection target of Rs15,264 billion and to raise the tax-to-GDP ratio. It has also asked for higher General Sales Tax collection at federal and provincial levels.
The fund has suggested progress in tax collection from the retail, wholesale and agriculture sectors before the new budget. It has also urged that all sectors outside the tax net, including professionals, be brought into it.
FBR officials said that if the shortfall widens further, the government could have to choose between new taxes on the public and cuts in government spending. Revenue-related conditions are expected to become stricter in coming economic reviews and may be tightened for the next fiscal year.
Sources said meeting the agreed conditions of the $7 billion loan programme is mandatory.
Separately, Minister of State for Finance Bilal Azhar Kiani told the National Assembly Standing Committee on Finance that the government would take legal action and impose fines on shopkeepers not registered under the Easy Tax Scheme. Registrations remain below expectations, and he said the enforcement mechanism would be presented within a few days.
Committee Chairman Naveed Qamar questioned the scheme's progress, saying the government had expected 80 percent of shopkeepers to register.
Why it matters
If the shortfall grows, FBR officials say the government may have to pick between new taxes on the public and reduced spending, which could affect households and businesses. Shopkeepers not registered under the Easy Tax Scheme face possible fines and legal action.
