Minister of State for Finance and Revenue Dr. Aisha Ghaus Pasha has said that the government would very soon resolve all issues with the International Monetary Fund (IMF), including personal income tax reforms agreed upon by the previous government.
At the conclusion of the Senate Standing Committee on Finance on Thursday, Dr. Pasha said the discussions with the IMF to reach a staff-level agreement will conclude very soon. The government is negotiating with the IMF on a daily basis. She added that the discussions are held on budget numbers on a daily basis.
She said the IMF is analyzing each and every number of the budgetary targets. “We are trying to give them clarity on all issues raised by them. We are very confident that all issues will be resolved very early,” she said.
The primary concern of the IMF is the non-fulfillment of the conditions of the personal income tax reforms. She added that once the tax base is broadened and the number of filers increase, the government will be able to effectively deal with the withholding tax regime.
The minister said that the real problem is that the previous government did not enforce measures required as per conditions and timelines agreed upon with the IMF.
She said that the IMF is not demanding any new additional taxation measures in 2022-23 except for the fulfillment of the conditions and benchmarks agreed with the previous government under the IMF program.
“I want to categorically clarify that the changes proposed in the personal income tax rates and the increase in the petroleum levy were already agreed by the previous government with the IMF. If we talk about the increase in electricity prices, it was also agreed with the previous government. Thus, the IMF is not seeking new measures but the implementation of the conditions already agreed with the past regime,” she said.
The minister further said the real issue is the non-fulfillment of conditions and missing timelines which have created a backlog for the current government. We are also convincing the IMF that we are clearing the backlog, but it is difficult for the government to move ahead expeditiously with the implementation of measures.
She added that it is not possible for the government to fully implement all conditions that were deliberately deferred by the PTI government, but we want to implement measures up to the level of adjustment that the economy can tolerate.
When asked whether China has agreed to roll over a $2.3 billion loan to Pakistan, she confirmed that the processing of the agreement is nearly completed.
Furthermore, regarding the inflationary impact of the increase in petroleum prices, she said the impact of inflation is not solely faced by Pakistan, but it is a global phenomenon.
During the meeting of the Senate Standing Committee on Finance, while reviewing the Finance Bill 2022, the minister stated that the change in the holding period and tax rate on capital gains of immovable properties has been proposed to control speculative buying and selling of open plots.
She said the government is trying to discourage the uneven gains by charging a part of the unearned gains. The purpose is to divert non-productive investment to productive investment through the capital gains of the immovable properties. The government wants investors to shift their investment to productive areas. In this regard, the government has given a number of tax incentives in the budget, including for agriculture investments.
The government had the choice to rely on indirect taxes, but it focused on direct taxes on a progressive basis. The government has not imposed any indirect tax in the budget (2022-23), she added.
