Islamabad:
Pakistan urged Thursday to the International Monetary Fund (IMF) to allow him to reduce the tax rates with the regional countries to stop the increase in external money, since the global lendist did not see any important progress in taking advantage of the true income of retail retail and merchants.
On the second day of conversations, the IMF also informed foreign diplomats about the results of the first review. The IMF greatly showed satisfaction with the implementation of the program, except in the areas of property, real estate and privatization, according to people aware of the meeting.
The global lender supported a constant increase in economic growth, saying that any rapid change at a higher growth rate could cause concerns regarding the highest fiscal account deficits.
During the interaction with foreign diplomats, a diplomat asked about the expansion in the Federal Cabinet in the middle of the IMF visit to Pakistan. According to the sources, the IMF delegation said that the size of the cabinet was even smaller than the anterior cabinet.
Prime Minister Shehbaz Sharif has doubled the size of his cabinet to more than 50, also creating a new department: the Public Affairs Unit.
The IMF informed diplomats about general progress in the implementation of key reforms, particularly the introduction of agricultural income tax. He acknowledged that the progress in the collection of taxes in the agricultural sector would be gradual.
However, the sources said the IMF declared at the meeting that there was no great success in bringing retailers to the network, and that there was also the need to bring changes in the real estate sector. The IMF also emphasized the privatization agenda, they added.
The IMF’s information session was not sincere and Mission Chief Nathan Porter gave guided responses to diplomats, the sources said.
Pakistan and the IMF joined their gaps in the fiscal objective, which in terms of the size of the economy could remain in 10.6% of GDP, but in absolute terms, it would decrease below RS12.5 billion due to the reduced size now estimated of the economy.
Meanwhile, the Pakistani authorities urged the IMF on Thursday to reduce tax rates to stop the country’s capital flight. The problem was raised by the FBR, which said that due to attractive rates in the Gulf region, the money was flying, the sources said.
Due to the high taxes on transactions, political and economic uncertainty, people get their money and are parked mainly in Dubai. The FBR has identified 72 real estate agents, which are fundamental to make investments in the Gulf, according to government sources.
The Express PAkGazette has seen the list of these names, which transport people from some influential families. However, the government has no means to avoid investing abroad. Some of them are tax files with the FBR, officials said.
The sources said the FBR admitted to the IMF that merchants and jewelry were the two hard nuts to break. The FBR also confessed before the IMF that, due to the main design defects, the Tajir Dost scheme had failed.
The Government would be supposed to charge RS50 billion of merchants under the scheme, but ended up collecting peanuts.
The IMF was informed that the big merchants also prevented the little ones from joining the scheme and, as a result, could not expand the scheme to 43 cities. The FBR plan to bring a minimum of 10 million retailers on the network failed, it was told to the IMF.
However, the FBR informed the IMF that it managed to show some progress. During the first eight months of this fiscal year, there was a 30% increase in the records of new taxpayers and the number of returns increased from 509,173 to 774,494. There was an increase of more than half in the presentation of the declaration and, as a result, tax withholding also increased 43% during the first eight months.
Tax payments of the corporate sector thoroughly and more presentation increased from RS86 billion to RS291 billion.
It was told to the IMF that the FBR had made changes in income tax declarations to facilitate that people show their land owners. But the FBR did not have access to land maintenance data at Tehsil and Towns level. There was also a problem that people have given their land on lease, which will make it difficult to raise taxes on agricultural income.
It was told to the background that there was some progress in the expansion of the point of sale (POS) network to the stores, a quasi-time connection between the store and the FBR database. In June there were 30,500 stores integrated through Pos, a number that has now grown at 37,200, was told to the IMF.
A brand company can have dozens of stores, which means that the real number of merchants linked to the FBR can be around 10,000. The FBR plans to point to 137 main chains to track sales, fountains said.
The real challenge will be to bring the rich jewelers on the network that they remain still from the FBR network, the sources said.
The sources said the IMF will modify the objective of the FBR to bring new taxpayers to the network specifying the real number of new retailers, real estate and wholesale dealers. This is being done to avoid the generic statement that tens of thousands of new taxpayers have taken to the network, sources said.
