ISLAMABAD: The Federal Board of Revenue (FBR) is trying to woo the International Monetary Fund (IMF) to reduce the tax collection target in the budget for the next financial year (FY) by Rs250 billion as talks between Pakistan and the Fund continue.
Sources told that the FBR had requested the IMF to cut down its tax collection target from Rs14,307 billion to Rs14,057 billion.
They informed that after a reduction in the target, the levy of new taxes would no longer be needed and in the event of increasing the target, there were fears of an increase in the shortfall.
The Board officials have briefed the IMF that there could be a shortfall of Rs1170 billion due to a reduction in the economic growth rate and the rate at which inflation increased during the ongoing FY.
Therefore, the money lending organisation had been requested, sources added, not to increase the target beyond Rs2,000 billion for the next FY.
A proposal, they disclosed, had also been floated to import a five-year-old used car because by levying a heavy tax on its import, more customs duty would be collected.
On Tuesday, media reported that the government had accepted some key demands made by the International Monetary Fund (IMF) as talks between the two sides on the budget for the next financial year (FY), 2025-26 progressed.
Sources told that both sides had agreed to withdraw the tax exemption granted to the erstwhile Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA).
They informed that similarly, both the government and the IMF had also agreed to impose a levy on the petroleum products from the next FY, starting July 2025, following which per liter of fuel levy was expected to reach Rs100.
Sources further said that both sides had also thought over using a levy for a reduction in the power sector subsidies and circular debt.
The IMF team had arrived in Pakistan two days ago for crucial budget talks.
The current round of discussions, which will continue till May 23, will help determine whether Pakistan’s proposed budget meets the fiscal and reform targets agreed with the IMF under the Extended Fund Facility (EFF).
