By Staff Reporter
ISLAMABAD: The International Monetary Fund (IMF) has cast doubt on Pakistan’s ability to meet its ambitious tax collection goal for the current fiscal year, as lower imports and legal challenges pose risks to revenue growth, officials said on Friday.
The IMF staff team, who is in Islamabad for the first review of a $3 billion standby loan programme, raised their concerns during the first round of talks with the Federal Board of Revenue (FBR), Pakistan’s tax authority.
The FBR officials tried to convince the IMF mission that they were on track to achieve the revenue target of Rs9.4 trillion for the year ending June 2024, as they had already collected Rs2.748 trillion in the first four months (July-October), exceeding the projected amount by Rs66 billion.
However, the IMF team questioned the sustainability of the revenue performance in the remaining months, especially in November and December, when the FBR had set a challenging goal of over 1 trillion rupees, according to official sources who spoke to The News, a local newspaper.
“The IMF has also questioned the FBR’s reliance on imports to generate sales tax and customs duty, which account for more than half of the FBR’s total revenues, as imports have declined by 7.4 percent in the first quarter of the fiscal year compared to the same period last year,” the newspaper said.
The FBR told the IMF that the revenue authority is confident of achieving the December target, as the collection of super tax and corporate returns would boost the revenues.
The FBR said it was working on digitizing the data of 126 departments to identify tax evaders, but it faced legal hurdles in implementing the plan, as the law ministry had opposed issuing a presidential ordinance to authorize the data integration under the caretaker government that is overseeing the general elections scheduled for February 8, 2024.
The IMF staff pointed out that the FBR faced legal and constitutional obstacles in implementing some of the revenue measures, such as imposing a presidential ordinance to collect more taxes, or taxing the agriculture income, which is a provincial subject.
The IMF urged the FBR to broaden the tax base by bringing more potential taxpayers into the net, especially in the agriculture, property, and retail sectors, which have a combined annual tax potential of up to Rs3 trillion.
The IMF and the FBR are expected to continue their discussions in the coming days, as they try to reach an agreement on the revenue target and the fiscal deficit for the current year.
Pakistan secured a bailout package from the IMF in July 2023 and has so far received about $1.2 billion under the programme. It is expecting to receive another $710 million tranche after the completion of the first review.
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