Govt tells World Bank: Agri tax legislation to be completed in next Jan

ISLAMABAD: Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, Tuesday, apprised the World Bank (WB) on progress towards implementation of Agricultural Income Tax Regime with the help of provinces.

Aurangzeb held a meeting with Najy Benhassine, country director of the World Bank, and his team at the Finance Division on Tuesday.

The meeting was also attended by the finance secretary and senior officers of the Finance Division.

Agri tax collection from coming July: Aurangzeb

During the meeting, the issues related to Agricultural Income Tax Regime and GST harmonisation in coordination with provinces and enhanced focus on active role of National Tax Council also came under discussion.

The finance minister informed that legislation for imposition of tax on agriculture sector would be completed by January next year that would become effective for collection from July 1, 2025.

The Punjab government has passed the Punjab Agricultural Income Tax Bill, 2024, in the provincial assembly.

The federal and four provincial governments have agreed on a National Fiscal Pact (NFP) with a wide-ranging 19-point agenda that seeks to achieve fiscal discipline, eliminate resource duplication at the federal and provincial levels, and enhance provincial revenue generation by streamlining, and harmonising agriculture and several other areas under the provinces’ tax jurisdiction.

During the meeting, the federal minister highlighted the importance of collaboration with the World Bank to support Pakistan’s economic reforms and development agenda. He appreciated the World Bank’s financial and technical assistance across various sectors and reiterated the government’s commitment to fiscal discipline, sustainable growth, and efficient resource utilisation.

Discussions focused on the establishment of a robust and transparent tax policy framework to enhance revenue mobilisation and improve compliance while ensuring equitable taxation.

The World Bank’s team also offered technical assistance to streamline the budget-making process, adopting modern practices to improve transparency and accountability in public financial management, an effective debt management mechanism to ensure fiscal sustainability and reduce risks.

Najy Benhassine appreciated the government’s reform initiatives and assured continued support from the World Bank in key areas identified during the discussions. He reiterated the World Bank’s commitment to assisting Pakistan in addressing economic challenges and achieving its developmental objectives.

The bank has recommended that a more robust economic recovery will require the steadfast implementation of an ambitious, broad and credible reform programme to improve confidence and boost investment.

Rapid reforms are required to: i) improve the quality of expenditures and reduce the distortive presence of the state in the economy including SOE reforms and privatisations, reduced untargeted subsidies, and reduced federal expenditures in areas devolved to provinces, implementing the Treasury Single Account and reforming the pension system; ii) broaden the tax base including increased taxes on agriculture, retail, and property, reduced tax exemptions and loopholes, and improved administration, particularly via digitalisation; iii) addressing regulatory constraints to private sector activity including cutting red tape and removing barriers to foreign investment; iv) removing the anti-export bias in trade policy including tariff rationalisation and reform of export subsidy schemes, simplifying the business environment and maintaining a flexible and market-determined exchange rate; v) addressing inefficiencies and high costs in the energy sector including continued tariff reform and increased private sector participation in distribution and transmission.

Copyright Business Recorder, 2024