Now, IMF pressurises Pak Govt to 'cut tax exemptions' to meet revenue collection target

Islamabad, Feb 5(ANI): Besides asking Pakistan to increase the power tariffs, the International Monetary Fund (IMF) has also asked the financial crisis-hit country to reduce the tax exemptions in order to overcome the revenue shortfall during the remaining months of the current fiscal year.

"The IMF has asked Pakistan to reduce the tax exemption which accounts more than 100 billion rupees every fiscal year, as it will help the tax department in achieving the annual revenue collection target for the current financial year," The Nation quoted a government official, as saying on the condition of anonymity.

He said the government had clarified to the IMF that it could not introduce the Reformed General Sales Tax (RGST) in the ongoing fiscal year, instead it would bring it in next year's budget.

Therefore, IMF officials were of the view that the government should reduce those tax exemptions that could be done through notifications, sources said.

It might be mentioned here that the government had given 147.2-billion-rupee tax exemptions in the fiscal year 2009-10, which were 25 per cent more than the tax concessions of 2008-09.

The government has not only failed in introducing additional revenue generation measures but its tax department has also performed poorly in tax collections in this fiscal year so far.

While the Federal Board of Revenue (FBR) is struggling to achieve the annual tax collection target of 1604 billion rupees set for the current fiscal year owing to the slowdown in the economy, the government is contemplating revising the tax target to less than 1600 billion rupees.

Meanwhile, the sources said the IMF has also asked the Pakistan government to bring reforms in the power sector apart from increasing the power tariff in the remaining period of ongoing fiscal year. (ANI)