Government is considering additional tax measures amid FBR revenue shortfalls

• Officials say the IMF will send its team to Pakistan in December.
• The FBR may propose to increase the rates of withholding tax on all imports.
• Hike withholding tax on the sale of land, buy on cards as well.
  

ISLAMABAD: The incumbent government has no choice but to consider implementing additional revenue measures in the form of mini-budgets or spending cuts amid the failure of the Federal Bureau of Revenue (FBR) to meet its tax targets. The News reported on Sunday.

The International Monetary Fund (IMF), although not confirmed, may send its mission to Islamabad any time in the coming weeks, with Pakistani authorities saying the lender’s team will visit the country next month (December 2024 ).

However, insiders insist the IMF team may prefer to come soon.

An ordinance has been drafted and is likely to be brought before the federal cabinet soon. It is expected that the decree may be issued within the current month.

FBR top brass claim that the proposed ordinance may implement strict enforcement measures such as freezing of bank accounts and ban on purchase of plots, vehicles or other measures.

“FBR may propose increase in withholding tax rates on all imports, increase in withholding tax rates on sales and purchases of real estate and some other hikes in tax rates,” top official sources confirmed to the publication a day earlier.

There is still an option for economic managers to squeeze the development budget further in the form of the Public Sector Development Program (PSDP).

In the first quarter (July-September), utilization was just Rs 22 billion, despite a revised allocation of Rs 1,100 billion for the entire financial year 2024-25.

The FBR faced a revenue shortfall of Rs 189 billion in the first four months (July-October) of the current financial year and concerns were growing that the tax machinery would continue to face a deficit in the first six months (July-December). the current fiscal year.

The revenue forecast undertaken by the FBR showed that there could be a shortfall of Rs 321 billion in the first six months, with no option but to consider a small budget to bring the fiscal framework in line with the IMF accord.

It may still be at the government’s discretion to appease the IMF by cutting spending, but the finance ministry would not be happy with any such proposal.

In a meeting held a few days ago under the finance minister and the finance minister, the finance ministry bosses were upset and unhappy with the Rs 321 billion fiscal deficit revenue forecast that is expected to occur in the first half of the current fiscal year. . If the fiscal deficit widens, then the finance ministry will be forced to curtail its rampant spending.

“Team Pakistan will be walking a very tight rope because if the revenue measures in the form of increased tax rates get a nod, it may further shrink the economy,” an official said, arguing that demand in the economy has already been suppressed and Increases in tax rates will further stifle economic activity.

When the TV channel aired the stories, the FBR spokesperson said in his official statement on Saturday that some news channels carried a totally baseless and false story that the IMF had rejected the FBR’s request for revision of the targets.

“It is categorically denied that any such meeting with the IMF had taken place on this matter. Nor was this issue ever on the agenda of any of the meetings, virtual or not, with the IMF.

“Hence, the FBR not only rejects the news but also advises the national media to refrain from such fake stories, which may adversely affect national interests,” he said.