IMF shows concerns over next year’s tax target and mounting expenditures

Minister of State for Finance Aisha Ghous Pasha has said that the International Monetary Fund (IMF) has shown concerns over next year’s tax target and mounting expenditures.

Talking to the media in Islamabad, Aisha Ghous Pasha said that the IMF has raised many questions on budgetary numbers.

They are concerned about the issue of expenses and next year’s tax target of FBR, she added.

Ishaq Dar held a virtual discussion with IMF Mission Chief Nathan Porter on Tuesday and we informed the IMF about the strategy and vision of the budget, the minister shared with the reporters.

The purpose of the budget is to bring economic growth, however, strategic level discussions are being held with the international organization, she added.

The Minister of State said that there will be more technical discussion with the IMF on other data including expenditure. She also said that the IMF also plans to hold discussions with the Power Division and State Bank officials, over exchange rate and policy rate.

She further said that the government will not take any step except for the economic stability of the country.

The government has not decided to increase the petroleum levy yet, only the law has left room. If the law is passed, the government will increase or decrease the rate of petroleum levy, only if necessary, she added.

It is important to note here that the Ministry of Finance on Tuesday proposed an amendment in the Petroleum Products (Petroleum Levy) Ordinance, 1961, to transfer the power of fixing the petroleum levy, from the parliament to the Cabinet.

Dr. Aisha Ghaus Pasha, remained silent on a question pertaining to the introduction of an “amnesty scheme for overseas Pakistanis”. 

Earlier, the Senate Standing Committee on Finance and Revenue directed the Federal Board of Revenue (FBR) and other enforcement agencies to check the massive misuse of UAE number plate vehicles in Pakistan, which foreign dignitaries including Arabs had temporarily imported for their use during hunting seasons.

While reviewing the Finance Bill 2023, the committee recommended the confiscation of vehicles gifted by Arab dignitaries during their visits to Pakistanis for hunting.

Committee Chairman Senator Saleem Mandviwalla expressed serious concern that the vehicles temporarily imported by the Arab dignitaries are not re-exported back to their respective countries. 

He said that there are instances where individuals freely bring these vehicles to the Parliament House. These vehicles are gifted to the Pakistanis and they continue to use the vehicles with the same foreign number plates. Adding to that, the chairman said that the local police are also afraid to take action against the drivers of such vehicles on the assumption that some powerful person might be the owner of the vehicle.

Federal Board of Revenue (FBR) Member Customs Policy Suraiya Ahmed Butt was of the view that the Ministry of Foreign Affairs gave the foreign dignitaries a time period, for a temporary import of vehicles during the hunting season. The procedure has been further tightened to check for any misuse of the facility.

In this regard, the government gives special permission for the temporary import of vehicles which is further extended. The overstayed vehicles are confiscated as well. She explained that a detailed procedure has been given in Chapter-99 of the Pakistan Customs Tariff for the disposal of such vehicles.

The Committee chairman Senator Saleem Mandviwala emphasized the importance of ensuring that any relief or concessions provided to businesses in terms of duties should be passed on to the customers through a decrease in prices. He also stressed the need for a complete picture to be presented regarding the sales tax and income tax concession, if any are being extended to these businesses.

Expressing his views on regulatory duties, Senator Mandviwala highlighted that they should not be utilized as a revenue-generating measure. Instead, their purpose should be to promote fair trade practices and protect domestic industries.

Representatives of the Packaged Juices industry requested the senate committee to abolish the 10% excise duty. Government had increased the excise duty last year which, according to the representatives, has not resulted in a substantial revenue gain for the government. It has also caused a substantial decrease in sales for the companies.

Representatives of the Pakistan Association of Large steel  producers briefed the committee about problems being faced by the Steel Industry. They were of the  view that supply of local steel scrap should be exempted from sales tax under section 13 of the sales tax act 1990. They also suggested that income tax withholding rate on scrap supplies be reduced to 0.25% under section 153 of the income tax ordinance.

Representatives of APTMA briefed the committee about the problems faced by the textile industry in Pakistan. They informed that in the current budget there is no subsidy in electricity and gas for the textile industry which will create problems for the industry.

APTMA said that the government must amend the budgetary proposals and provide much needed relief to the textile industry as 20 million human resources are attached with the Textile industry. They said that already 50% of textile units in Punjab have shut down due to increase in cost of production. If the subsidy is not provided the 25% more units will shut down.

They suggested that similar to the previous year’s budget, subsidy on electricity and gas may be extended to the textile industry for its survival.