Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin on Friday assured that the government would not increase taxes in the supplementary budget it plans to introduce in the National Assembly following the agreement with the International Monetary Fund (IMF) earlier this week.
However, certain exemptions will be withdrawn, he shared while talking to the media in Karachi.
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When a reporter asked the adviser to comment on the mini-budget, Tarin remarked that it seemed the reporter wanted to create sensationalism. “Taxes will not increase. Certain exemptions will be withdrawn.
“In March, the government had signed for [removal of] Rs700bn in exemptions and [imposition] of new taxes, after which it got $500 million,” he recalled.
He was referring to the release of $500m by the IMF in March after approving four pending reviews of the country’s economic progress following the government’s decision to implement the withdrawal of corporate tax exemptions and put in place a mechanism for automatic electricity power tariff increases.
“When I came [as finance minister], I had said we will not allow an increase in taxes. We will not allow [the IMF] to impose more taxes on people who are already paying them.”
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The adviser said his ministry had stood firm on its stance of not increasing taxes during negotiations with the IMF.
Tarin said the IMF questioned why Pakistan had distorted its tax system, adding that the Fund’s argument held substance. “They say, ‘you have imposed 17 per cent sales tax on some [sectors], zero on some and 10pc on some. Take your sales tax and give them targeted subsidies [instead]’.”
Talking about the fertiliser industry, the adviser said the government provided subsidised gas to companies as well as did not impose any tax. The combined subsidy provided to the fertiliser industry was around Rs150 billion, he said, questioning: “Is this reaching our farmers?”
The government will use the Ehsaas database to provide direct subsidy to farmers instead, he said.
