September 25, 2020

IMF Optimistic About Pakistan’s Economic Future

The IMF has projected that Pakistan’s total revenues in the FY 2023-24 will be around Rs13.37trillion. IMF says that this will be a result of the austerity measures of the government. IMF projects that if the country introduces policies that broaden the tax net then the revenues will increase greatly.

IMF projections are as follows:

IMF says that the policies will likely result in the process of filing tax returns becoming much simpler. The policies would build up coordination between different departments at the federal and provincial level and hence, make the taxation process simpler.

FBR had already been collecting data of the non-filers by the coordination of different departments. The data of all the people who owned properties worth more than Rs20million and owned a car of 18ooCC or above was filtered and more than 3000 legal notices were served to the high-income category of the population, for not filing their taxes.

Moreover, the government is planning to impose the policy of CNIC based invoicing, which will bring a massive part of the population into the tax net. The current number of Pakistan’s taxpayers stands at around 1.5 million people. Most of these people belong to the salaried class whose taxes are deducted at source, leaving behind a shockingly low percentage of people who pay their taxes voluntarily.

Experts say that the size of the black economy of Pakistan is even greater than its documented economy. This may be a result of either not declaring or under-declaring the taxable assets and income. However, in the recent tax amnesty scheme, almost 137,000 people declared their assets worth $18.75 billion and $430 million were collected in the form of tax revenues.

Many might have accepted IMF projections, but Dr. Hafeez  Pasha, former Finance Minister of Pakistan, argued that the IMF projections might be incorrect. In his interview with The News, he pointed out certain factors that were not according to the IMF predictions. One of the major effects of these incorrect projections would be a higher inflation rate, which could destabilize the economy of Pakistan.

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