IMF raises objections to Pakistan’s budget for FY24

    IMF raises objections to Pakistan's budget for FY24
    IMF raises objections to Pakistan's budget for FY24
    ISLAMABAD: The International Monetary Fund (IMF) has raised serious concerns about the budgetary framework for 2023-24 and has requested that the government increase both tax and non-tax revenue efforts, Ministry of Finance officials told the Senate Standing Committee on Finance and Revenues on Tuesday.

    A senior Ministry of Finance official admitted before the committee that the IMF was not satisfied with the budgetary framework for 2023-24, so they would have to justify raising the petroleum development levy to Rs869 billion for the next fiscal year, up from Rs542 billion in the previous fiscal year.

    However, senators were outraged by the Ministry of Finance’s proposal to bypass parliament and empower the government by amending the Petroleum duty Ordinance 1961 to raise the petroleum duty above Rs50 per litre.

    The government has calculated a petroleum levy of over Rs50 per litre and will raise it to Rs60 per litre through the Finance Bill 2023-24, taking into account the country’s consumption trend.

    So far in the current fiscal year, diesel usage has been reduced by 45%.

    The Senate panel also rejected the imposition of a 0.6% advance tax on cash withdrawals exceeding the Rs50,000 limit, proposing instead to raise the tax rate to 1% and lower the limit to Rs25,000 for non-filers.

    It also proposed modifications to Super Tax rates, including lowering the maximum rate from 10% to 8% for the highest bracket.

    In another noteworthy event, the Securities and Exchange Commission of Pakistan (SECP) expressed grave worries about rising money laundering risks after increasing the monetary ceiling for foreign transfers from five million rupees to $100,000.

    Under Section 111 of the Income Tax Ordinance 2001, SECP Commissioner Abdul Rehman Warraich briefed the Senate committee that the FBR could not request the source of investment or income.

    Similarly, under Section 111 of the Ordinance 2001, the FBR cannot investigate tax evasion based on the source of remittance.

    Section 111 essentially taxed unexplained income with the exception of overseas remittances received in Pakistan.

    Earlier, a female Joint Secretary of the Budget Wing Ministry of Finance revealed during a Senate Standing Committee on Finance meeting that the amendment in the Finance Bill for 2023-24 proposed to grant the government powers through the Fifth Schedule to make the petroleum levy flexible and increase it to Rs60 per litre whenever necessary.

    She further stated that the Ministry of Finance has calculated raising the petroleum duty to Rs60 per liter from the current limit of Rs50 per liter in order to reach the required amount from the petroleum levy.

    Senator Saleem Mandviwalla presided over the Senate committee. The chairman enquired as to why the finance ministry refused to come to parliament to increase the ceiling of the petroleum charge, but ministry officials were unable to satisfy the members.

    Senator Mohsin Aziz of PTI and Saadia Abbasi of the PML-N both opposed the addition of three more slabs to the super tax, claiming that such taxation plans demonstrated the government’s disdain for wealth-creating sectors of the economy.

    “The taxation policy aims solely at squeezing existing taxpayers,” Senator Abbasi stated.

    Representatives from the Balochistan Chamber of Commerce and Industries briefed the Senate panel that money was being minted at every checkpoint of Levies, customs, and other law enforcement authorities.

    “We can share exact details about how much speed money is charged at each check-point located in different parts of the province,” a Balochistan chamber representative stated.


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