Islamabad:
Finance Minister Muhammad Aurangzeb confirmed Pakistan’s obligation on Wednesday to raise tax collection to 11% of GDP at the end of the financial year despite the Federal Board of Revenue (FBR), which lacks its quarterly target with RS198 billion.
Aurangzeb told journalists after a parliamentary committee meeting that the negotiations with the IMF progressed in the “right direction.”
Separately informed Pakistan IMF that its requirement to publish the declarations of the senior public officials – including beneficial owned assets and those that family members would only apply to officials, not the judiciary or other state institutions.
“We are very clear that we remain obliged to obtain FBR’s tax-to-BNP ratio of 11% at the end of this financial year,” the minister said in response to questions about the deficit.
He spoke with journalists after the meeting of the Senate Standing Committee for Financing. Senator Saleem Mandviwalla from PPP was chairman of the meeting.
For the current financial year, the IMF has set Pakistan a target of raising FBR’s tax-to-BNP ratio by 0.7 percentage points to 11%. This means an annual collection target of RS14.13 trillion that requires extraordinary enforcement measures and significant efforts to expand the tax base. FBR will have to move beyond perks such as cars and more wage increases for officers and instead focus on expanding the taxpayer’s base to meet the target.
In the previous financial year, FBR had missed the IMF-Benchmarks on both counts: The tax-to-BNP ratio slid below the 10.5% target, while the absolute collection also fell under almost RS13 trillion.
Against the July-September goal of RS3.083 trillion, FBR RS2.885 trillion. It suffered a deficit of RS198 billion within a period of only three months despite launching several initiatives, including a heavily funded FBR transformation plan.
The minister said some of the revenue was tied up in litigation in the hope that decisions about them can bridge the revenue deficit that was maintained in the first quarter. But he clarified that it is up to the courts how they decide the cases.
FBR said that RS177 billion worth of tax revenue was sitting in the Supreme Court in Pakistan, and it has now conveyed to the IMF that the point is expected to make a decision this month. However, similar insurance for the IMF had also been given in the last financial year.
The disputed cases involve challenges from taxpayers against the retrospective use of the super tax and the government’s decision to impose further taxes on 10 sectors in the economy.
While answering a question whether the IMF negotiations would end on time, the finance minister said “so far, so good.” He added that the IMF negotiations covered both the quantitative performance criteria and the structural benchmarks.
“No matter what discussions happen, they move in the right direction,” the Finance Minister added.
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The sources said that the cabinet ward early this week also gave a briefing to the IMF on the implementation status for a condition of changing the law of officials to ensure that the high -level public officials, including assets that are beneficial owned by them and a member of their family, are digitally submitted and publicly available through FBR.
The IMF was told that the federal government’s employees under the officials are covered, while the judiciary and the military officers do not fall into the law of law.
The IMF asked about the mechanism of responsibility for officials who had discrepancies in their declarations of activation. It was told that FBR can only assess these statements in view of any income tax evasion and cannot examine the assets with the lenses of corrupt practice, the sources said.
The discussions took place whether a new body should be formed to extensive to analyze the assets and do not limit them to just tax evasion, the sources added.
However, the IMF state remains largely ineffective, as even most of the officials do not fall into their purpose.
The law states that “official means a person who is a member of an All-Pakistan service or an official service in the Federation, or who has a civil position in connection with the Federation affairs, including any such submission associated with the defense.
But it does not include a person who is on deputation to the federation of any province or other authority and a person employed on contract, or at the workplace basis or paid from emergency services.
Due to a very narrow definition of a “civilian servant”, it is estimated that hardly 20,000 to 25,000 officials can be passed on. The officers of the autonomous bodies, regulatory bodies such as State Bank of Pakistan, National Electric Power Regulatory Authority, Oil and Gas Regulatory Authority and Pakistan Telecommunication Authority and Provincial Civil Services will still remain exempt from digitally filling the return and their subsequent public publication.
Under the condition of the IMF, a new clause 15-A declaration of assets in the old law had been proposed to be introduced with the aim of enabling the declaration of officials’ assets. The government has also eased the right to access to the Information Act of 2017 to enable this information publication.
The new clause states that “Despite everything that included in Klausul G in section 7 of the Court of Access to Information Act 2017, the declaration of assets for an official in BS-17 and above, his spouse and dependent children, including domestic and foreign assets and obligations that may be prescribed, has been submitted with the federal income committee and must be publicly available through The rules that can be prevented.
