ISLAMABAD: Federal Minister for Finance Shaukat Tarin has said that there was a red line defined by the prime minister that the government would not hike the electricity tariff and slap an additional Rs150 billion Personal Income Tax on IMF conditions during the coming budget.
“The IMF wants a hike in electricity tariff and increase in Personal Income Tax (PIT) more than double. The collection of PIT stands atRs113 billion now but the Fund wants to impose an additional Rs150 billion in it. There is a red line defined by PM Imran Khan that electricity tariff and personal income tax cannot be increased on IMF demands,” Federal Minister for Finance Shaukat Tarin made clear when asked about the ongoing talks with the IMF on the occasion of launching Economic Survey for 2020-21 here on Thursday.
The minister was quite blunt when a journalist asked about the ongoing talks with the IMF, saying that the talks were under way and the IMF was insisting upon continuation of stabilization, arguing that it should be on sustained basis. The IMF, he said, was asking for hiking electricity tariff but the PM refused to go ahead because it would have a ripple effect on surge in inflationary pressures. “No, we will not hike the power tariff and the personal income tax cannot be imposed for additional Rs150 billion collection,” he added.
He said the government asked the IMF to leave the strategy upon us how the FBR collection would be increased from Rs4.7 trillion to Rs5.8 trillion in the next fiscal year.
After the press briefing, he told journalists that Pakistan and the IMF possessed stated positions and efforts were underway to get a breakthrough but it had not yet occurred. He said that the talks would continue probably till August 2021 when the sixth review would be accomplished. When asked by this scribe whether talks with the IMF would continue till approval of the budget from the parliament, he said yes, it was one of the options but added in the same breath that Pakistan possessed no plans to exit from the IMF program.
He said that the IMF adopted a cookie cutter approach but the government was quite clear that it could not wait for trickle down effect, so it would intervene to uplift 4 to 6 million households in the upcoming budget through provision of housing and other incentives.
He said the government would abolish harassment of FBR and there would be a self-assessment scheme with a third party audit of 3 to 4 percent. Despite providing such incentives, he said if the government would find out willful tax evaders, then those would be sent to jail.
He said the government would abolish withholding taxes in a big way. There should be only two taxes i.e. Income Tax and Consumption Tax and all other taxes should be phased out, he added.
He said that out of the 85 state-owned enterprises, the government would identify 15 SOEs that would be revived and then privatized. He said the government would constitute a board under the Sarmaya Pakistan to overhaul 15 selected SOEs. He said that he always took pressures and delivered and cited the example of HBL whereas it was privatized and then overhauled. To another query regarding autonomy of Pakistan Bureau of Statistics (PBS), he said that he was an all-out supporter to grant PBS full autonomy and the government would move ahead on this front. He said that the DISCOs were running on inefficient basis and causing losses of Rs200 to Rs300 billion on per annum basis. The capacity payment standing at Rs450 billion in 2017-18 would be ballooned to Rs1.5 trillion by 2023. He said that the power generation capacity was over-stalled and it could not be fully utilized if the country started to grow at faster pace, so it had become a major source of burden on the power sector. The circular debt has become a black hole and it will have to be resolved, he concluded.