Friday June 21, 2024

IMF raises objections to budget

The global lender asks govt to increase tax, non-tax revenues;Senators oppose increase in petroleum levy to Rs60 per litre

By Mehtab Haider
June 14, 2023
International Monetary Fund. — AFP/File
International Monetary Fund. — AFP/File

ISLAMABAD: The IMF has raised serious objections over the budgetary framework for 2023-24 and asked the government to increase both tax and non-tax revenues efforts, the Ministry of Finance high-ups informed the Senate Standing Committee on Finance and Revenues on Tuesday.

One senior Ministry of Finance official conceded before the Senate Standing Committee on Finance and Revenues that the IMF was not satisfied with the budgetary framework for 2023-24, so they would have to defend increasing the Petroleum Development Levy up to Rs 869 billion for the next fiscal year 2023-24 against revised estimates of Rs542 billion in line with the revised estimates in the outgoing financial year.

But the senators strongly opposed the Ministry of Finance’s move to bypass the parliament and empower the government in the proposed amendment in the Petroleum Levy Ordinance 1961 to jack up the petroleum levy beyond Rs50 per litre. The government has worked out petroleum levy beyond Rs50 per litre and will increase it up to Rs60 per litre, keeping in view the consumption pattern in the country through the Finance Bill 2023-24.

The consumption of diesel has decreased by 45 percent so far in the outgoing financial year.

The Senate panel also rejected the imposition of 0.6 percent advance tax on cash withdrawals exceeding Rs50,000 limit and proposed to jack up the tax rate to 1 percent and reduce the limit to Rs25,000 for non-filers. It also proposed changes in the tax rates for Super Tax and recommended reducing the maximum rate from 10 to 8 percent for the maximum slab.

In another important development, the Securities and Exchange Commission of Pakistan (SECP) expressed serious concerns over increased chances of money laundering after the enhancement of the monetary limit of foreign remittances from five million rupees to $100,000.

The SECP Commissioner, Abdul Rehman Warraich, informed the Senate Standing Committee on Finance that the FBR could not ask for the source of investment or income under Section 111 of the Income Tax Ordinance 2001. Similarly, the FBR cannot probe tax evasion on the basis of the source of remittance under Section 111 of the Ordinance 2001. Basically, the Section 111 taxed unexplained income except foreign remittances coming into Pakistan.

Earlier, a female Joint Secretary of the Budget Wing Ministry of Finance made a startling disclosure during the Senate Standing Committee on Finance meeting that the amendment in the Finance Bill for 2023-24 proposed to grant powers to the government through the Fifth Schedule for making petroleum levy flexible and increase it to Rs60 per litre whenever required. She further said the Ministry of Finance has worked out jacking up the petroleum levy to Rs60 per liter from the existing limit of Rs50 per litre to achieve the desired amount from the petroleum levy.

The Senate Standing Committee on Finance and Revenues met under Senator Saleem Mandviwalla. The chairman inquired why the Finance Ministry did not want to come to parliament to increase the limit of petroleum levy but the Ministry high-ups could not satisfy the members.

Senator Mohsin Aziz of PTI and Saadia Abbasi from the PMLN opposed the insertion of three more slabs into the Super Tax and said that such taxation proposals indicated that the government was not in favour of wealth creation sectors of the economy.

“The taxation policy only aims at squeezing the existing taxpayers only,” Senator Sadia Abbasi said.

The Balochistan Chamber of Commerce and Industries representatives informed the Senate panel that every check-post of Levies, customs, and other law enforcement agencies was involved in minting money. “We can share exact details that how much speed money is being charged at every check-post located in different parts of the province,” the representative of the Balochistan chamber said.