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November 19, 2019

IMF rejects FBR’s plea to slash revenue collection target

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November 19, 2019

ISLAMABAD: FBR Chairman Shabbar Zaidi said on Monday that the IMF did not accept our request for slashing down the annual target of Rs5.5 trillion but efforts would continue for convincing the Fund team to this effect.

In the first review talks concluded on November 8, 2019, the IMF had refused to change the macroeconomic targets except slightly bringing down the inflationary projections. When asked about slashing down the FBR target in the Parliament House, Shabbar Zaidi replied that the FBR made request to decrease its target but the IMF did not accept it for the time being. “We will continue efforts to convince the IMF for slashing down the target” he added.

Pakistan and the IMF had worked out projections on the basis of some assumptions that the FBR could collect Rs5270 billion maximum keeping in view import compression against initially envisaged target of Rs5503 billion for the current fiscal year. So the revision into target of Rs233 billion discussed by the two sides. However, at final round of talks, the IMF refused to accept this projection of reducing the FBR revenue collection target. Some independent economists are projecting that the FBR could collect maximum Rs4400 to Rs4500 billion in the current fiscal year.

To another query regarding FBR’s restructuring plan, he said that the government did not back out from the FBR’s restructuring plan and only its timelines were changed. Earlier, a meeting of the Senate Standing Committee on Finance Revenue and Economic Affairs was held on Monday, at Parliament House.

Chaired by Senator Farooq Hamid Naek, the committee took up smuggling of LED TVs referred by Senate chairman and it was informed that the ongoing momentum of countrywide enforcement operations against smuggling of goods including LED TVs is in full swing, these measures have geared an increase of 40 percent during FY 2018-19 when compared to previous financial years.

Discussing details of increase in number of tax payers in the current financial year the Committee was informed that an increase of 65.2 percent was observed vis-a-vis the corresponding period of last year.

The Committee was also informed that out of 2655081 return filers, 888748 new tax payers have been added. The number of individuals that availed Asset Declaration Ordinance 2019 was 124,208. Tax payers of Rs4.7 billion under the present scheme was also observed.

The main challenge found by the agency has been a ban on recruitment which has now been removed. The Committee stressed the need for training of forces that have been granted anti-smuggling powers such as the Coast Guards and Frontier Corps. Reviewing whether increases in taxes and duties have contributed to a rise in smuggling of goods, the Committee was informed that there is zero percent tax on raw material. This was done specifically to encourage industrialisation. The Committee encouraged formulation of legislation for this purpose.

Deliberating over steps taken to get Pakistan out of the FATF Grey List, the Committee was informed that Pakistan is committed to align the country with global financial system and position Pakistan as a reliable partner in countering global ML/TF challenges. Towards this end Pakistan has formalised Internal Action Plan to revamp legal regulatory and supervising framework. It was asserted that legislative revamp in banking and financial systems, institutional reorganisation and capacity building, addressing enforcement e-governance and financial challenges, autonomy of regulatory framework and regimes while ensuring permanency of newly raised structures. In addition to this, Pakistan seeks to revamp the entire AML/CFT Regime. According to FATF assessment Pakistan has largely addressed five out of 27 action items.

Detailing revenue collected during the Financial Year 2019-20 as against a target of Rs5.5trillion, the Committee was informed that FBR has collected Rs1280 billion against a target of Rs1447 billion which is 16.3 percent higher than the previous year.

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