According to The News Agency, senior officials from the Ministry of Finance on Tuesday briefed the Senate Standing Committee on Finance and Revenues that the International Monetary Fund (IMF) had raised serious concerns about the budgetary framework for 2023–24 and requested that the government increase both tax and non-tax revenues efforts.
IMF Not Satisfied on 2023-24 Budget
The IMF was not satisfied with the budgetary framework for 2023–24, a senior ministry of finance official admitted before the committee, so they would have to defend raising the petroleum development levy up to Rs. 869 billion for the next fiscal year against revised estimates of Rs. 542 billion in the current financial year.
The senators, however, were vehemently opposed to the Ministry of Finance’s attempt to circumvent the legislature and give the government more power with the planned change to the Petroleum duty Ordinance 1961, which would have increased the petroleum duty above Rs. 50 per litre.
By using the Finance Bill 2023–24, the government will raise the petroleum levy from Rs. 50 per liter to Rs. 60 per liter while taking into account the nation’s consumption patterns.
In the current fiscal year, the consumption of diesel has reduced by 45% thus far.
The Senate panel also suggested raising the tax rate to 1% and lowering the cap for non-filers to Rs. 25,000 instead of the 0.6% advance tax that would have been applied to cash withdrawals that exceeded the Rs. 50,000 limit.
Additionally, it recommended lowering the top rate for the top slab from 10% to 8% and making revisions to the tax rates for the Super Tax.
Another noteworthy occurrence involved the Securities and Exchange Commission of Pakistan (SECP), which after raising the threshold for international transfers from five million rupees to $100,000, raised grave worries about the likelihood of increased money laundering.
According to Section 111 of the Income Tax Ordinance 2001, the FBR was not permitted to inquire about the source of investments or income, SECP Commissioner Abdul Rehman Warraich told the Senate committee.
Similar to this, Section 111 of the Ordinance 2001 prohibits the FBR from investigating tax evasion based on the source of remittance.
In essence, Section 111 taxed unaccounted money, with the exception of remittances from outside that entered Pakistan.
Earlier, a female Joint Secretary from the Ministry of Finance’s Budget Wing shockingly revealed during a meeting of the Senate Standing Committee on Finance that the Finance Bill for 2023–24 amendment proposed to give the government authority through the Fifth Schedule to make the petroleum levy flexible and raise it to Rs. 60 per liter whenever necessary like in the case of IMF.
She added that in order to raise the petroleum levy to the desired level of Rs. 60 per liter on the demand of IMF from the current limit of Rs. 50 per liter, it was calculated by the Ministry of Finance.
Under Senator Saleem Mandviwalla’s leadership, the Senate committee met. The chairman questioned the finance ministry’s decision not to appear before the legislature to raise the cap on the petroleum levy to please IMF, but the officials in the ministry were unable to appease the lawmakers.
Senators Mohsin Aziz of the PTI and Saadia Abbasi of the PML-N rejected the addition of three new super tax bands, arguing that such taxation plans showed the government’s opposition to the economy’s wealth-creating industries.
“The taxation policy only aims at squeezing the existing taxpayers only,” Senator Abbasi said.
The representatives of the Balochistan Chamber of Commerce and Industries briefed the Senate panel that money-making was taking place at all customs, levies, and other law enforcement checkpoints.
“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.
To read our blog on “IMF issue 3 points to PM before publicizing budget 23-24,” click here.
