ISLAMABAD: Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha has said that the government would very soon resolve all issues with the International Monetary Fund (IMF) including personal income tax reforms agreed upon by the previous PIT regime.
At the conclusion of the Senate Standing Committee on Finance meeting on Thursday, Dr Pasha informed that the discussions with the IMF will conclude very soon for reaching staff level agreement. The government is negotiating with the IMF on a daily basis. The discussions are daily held on budget numbers and projections. The IMF is analyzing each and every number of budgetary targets. “We are trying to give them clarity on all issues raised by them. We are very confident that all issues will be resolved very early”, she said.
The main concern of the IMF is the non-fulfilment of the condition of the personal income tax reforms. Once the tax-base is broadened and the number of filers increases, the government would be able to effectively deal with the withholding tax regime, she said.
The Minister of State for Finance stated that the real problem is that the previous government did not enforce measures required as per conditions and timelines agreed upon by them with the IMF. Contrary to this, the PTI government went totally 180 degrees against what it actually agreed with the fund.
“Now the government is facing problems of credibility and the IMF is checking each and every number again and again. There are not only the issues of credibility, but the present government is facing the consequences of things done by the PTI government”, she said.
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The government is patiently responding to every query of the IMF and satisfying them on each question raised by them, she maintained.
Dr Pasha categorically said that the IMF is not demanding any additional taxation measures in 2022-23 except the fulfilment of the conditions and benchmarks agreed with the previous government under the IMF program. “I want to categorically clarify that the changes proposed in the personal income tax rates and raise in the petroleum levy were already agreed by the previous government with the IMF. If we talk about the increase in electricity prices, it was also agreed by the previous government. Thus, the IMF is not seeking new measures but the implementation of the conditions already agreed with the past regime”, she said.
The Minister of State for Finance further stated that the real issue is that the non-fulfilment of conditions and missing the timelines has created a backlog for the present government. We are also convincing the IMF that we are clearing the backlog, but it is difficult for the government to move ahead expeditiously with the implementation of measures in future. But we want to implement measures up to the level of adjustment which the economy can tolerate. When asked about China’s loans to Pakistan, Dr Pasha confirmed that the processing of the agreement is nearly completed.
About the inflationary impact of the increase in the petroleum prices, she said that the inflationary impact is not only faced by Pakistan but it is a global phenomenon. The excessive import of commodities like sugar and wheat by the previous government was also an issue. With the help of provincial governments we are coming towards a better price management of essential food commodities, she added.
She added the government has done very hard work and the conditionalities and requirements of the FATF have been met. We are confident that Pakistan would soon be excluded from the Financial Action Task Force’s (FATF) grey list, she added.
During the meeting of the Senate Standing Committee on Finance, while reviewing the Finance Bill 2022, Dr Pasha stated that we strongly discourage indirect taxes measures that result in inflation. The government is moving towards resource mobilization through direct progressive measures in budget (2022-23).
The change in the holding period and tax rate on capital gains of the immovable properties has been proposed to control speculative buying and selling of open plots. The government is trying to discourage the uneven gains and charging a part of the unearned gains. The purpose is to divert the non-productive investment to productive investment like industry and agriculture, she maintained.
She stated that the government wants to give the message to shift your investment to the productive areas. In this regard, the government has given a number of tax incentives in the budget including admissibility of 100 per cent depreciation. To incentivize agriculture sector and farmers, customs duty exemption is extended further to Farm Mechanization and Logistics including agricultural machinery pertaining to irrigation, drainage, harvesting/ post-harvest handling and processing, plant protection equipment, as well as, machinery, equipment and other capital goods for miscellaneous agro-based setups.
Dr Pasha added that the government had the choice to rely on indirect taxes but it focused on direct taxes on a progressive basis. The government has not imposed any indirect tax in the budget (2022-23), she added.
Copyright Business Recorder, 2022
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