ISLAMABAD: Government informed International Monetary Fund (IMF) that Cabinet will approve different tax proposals to fetch an additional revenue of Rs 170 billion through presidential ordinance.

“We will adopt path of promulgation of an ordinance for avoiding further waste of time. Once Cabinet grants its nod presidential ordinance will be promulgated within current week,” sources told.

Washington-based lender suggested adopting path of permanent taxation measures by abandoning path of one-offs. Government, however, decided to drop flood levy on imports owing to stiff resistance from IMF and proposed jacking up General Sales Tax rate by one percent, raising it from standard rate of 17 to 18 percent.

If all dollar inflows are materialised, ongoing financial year will be ended without danger of looming default on an immediate basis.

IMF gave its prescription to slap standard rate of GST on petroleum products. However, petroleum levy on high-speed diesel will be jacked up from Rs 40 to Rs 50 per litre. Possibility of further increasing limit of petroleum levy cannot be ruled out at moment but Pakistan is still resisting it.

A senior official of Finance Ministry said that authorities shared their detailed comments with IMF’s review mission through virtual meeting on Memorandum of Financial and Economic Policies (MEFP) and asked Fund for adopting staggered approach for making adjustments on all fronts in phases.

However, IMF has conveyed in crystal clear tone that Pakistan will have to undertake permanent taxation measures in order to fetch Rs 170 billion in additional taxes in remaining period of current fiscal year.

“With imposition of taxes worth Rs 450 to Rs 500 billion on annual basis, government can raise additional revenues of Rs 170 billion in remaining period of current fiscal till June 30, 2023,” said sources.

However, another official said that government did not have luxury to wait for next 15 days because every day is counting to collect desired tax revenues of Rs 170 billion through permanent measures.

IMF has been informed that government was pursuing bilateral and multilateral creditors to secure desired dollar inflows and when it would get stamped approval and backing of IMF in aftermath of revival of Fund programme, Islamabad will be able to raise desired inflows of $ 12 to $ 13 billion.

Published in The Daily National Courier, February, 15 2023

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