ISLAMABAD: The federal government has assured the International Monetary Fund (IMF) of separating policy and administrative functions of the Federal Board of Revenue (FBR) within first 100 days of its tenure, which would help recover more than Rs2 trillion tax and power dues.
The government is seeking maximum financial support from the IMF to curb external account gap.
According to a senior official, the government is trying to secure maximum funds from the IMF because it is cheaper than all other financing avenues.
He continued that the programme modalities would be completed under the Memorandum of Economic and Financial Policies (MEFP) before November 22 after taking Prime Minister Imran Khan into confidence so that the IMF mission could take up approval of its executive board soon after its return to Washington.
The mission was informed that the government would work with full focus for maximum recovery of Rs900bn power sector dues from its public and private sector consumers and actively pursue at the highest level the earliest possible adjudication of court cases involving about Rs1.3 trillion revenue. The mission appreciated that a success on these two areas could address a lot of challenges in the public finance.
Minister of State for Revenue Hammad Azhar also confirmed saying that the two sides had broad agreement on comprehensive reforms. As part of this, he said the government would separate revenue policy and collection functions of the FBR and its approval would be secured from the federal cabinet within the current month. He said the leadership had already approved the move that would be rolled out as part of first 100-day report after formal approval from the cabinet.
He said the separation of policy and administrative function of FBR had been firmed up with the help of international experts and private sector stakeholders because it would ultimately the private sector led initiative to achieve higher economic growth.
Azhar said the initiative would ensure that FBR’s policy board comprised private sector and independent members to formulate a policy which will compel the revenue machinery to find new taxpayers and bring new areas into the tax net, thereby expanding the tax base and ending the existing conflict of interest.
Currently, the FBR policy makers tend to introduce policies that allow for easy ways of revenue collection, including increasing general sales tax rates and concentration of withholding taxes in the revenue policy, he said. However, these steps were putting excessive burden on existing tax payers and hence encouraging tax evasion, he explained.
