IMF wants structural changes to improve tax to GDP ratio: Shaukat Tarin

January 11, 2022: Federal Minister for Finance and Revenue, Shaukat Tarin Tuesday said that the International Monetary Fund (IMF) wanted Pakistan to make structural changes for improving tax to GDP ratio from just 9 percent to 20 percent for the benefit of the country itself.

Addressing to the interactive session with media persons along with Federal Minister for Energy Muhammad Hammad Azhar, Governor State Bank of Pakistan (SBP), Dr. Reza Baqir, Minister for Information and Broadcasting, Fawad Hussain Chaudhry, State Minister for Information Farrukh Habib and Special Assistant to Prime Minister on health, Dr. Faisal Sultan, he said that the existing tax to GDP ratio in the country was the lowest.

The Minister said, the IMF wanted Pakistan to collect additional taxes of Rs700 billion by eliminating various tax exemptions, however with negotiations with the team, the government was successful in convincing them of Rs343, hence declining the demand by Rs357 billion.

The Minister said that out of this, Rs71 billion is taxed on luxury items of the rich.

He said that despite the IMF demands, the government did not enhance taxes on various items and also did not do away with some exemptions including pesticide, fertilizer, tractors, and provident fund and food and beverages items.

Tarin said that “we also subsidized solar panel and other items and paid 100% tax on laptops.”

"We have an Rs33 billion subsidy option that we can use as needed," he said.

He said that the government has given a tax exemption of about Rs350 billion which is not discussed anywhere.

The Finance Minister dispelled the misconceptions about the Autonomy of the State Bank of Pakistan (SBP).

He said that even when the SBP is provided autonomy, all of its 8 board members would be selected by the government, so there is no question of any compromise.

The Minister said that the government wanted to give autonomy to the State Bank of Pakistan and it would not be like in the past when the government used to overdraft Rs7 trillion and insisted on printing currency notes.

He said that a total of eight board members of SBP will be nominated and appointed by the government and “we want to empower the Central Bank board.”

Answering a question, he said that there is a market of Rs700 billion rupees in the pharmaceuticals sector, but cosmetics and energy products made from this zero duty raw material of Pharmaceutical allied will be taxed.

"We have kept the exchange rate stable at Rs166," he said, adding that the government had stabilized the exchange rate, which was impacted by the situation in the neighboring country, Afghanistan.

Governor State Bank of Pakistan (SBP), Dr. Reza Baqir said that the decision of autonomy of any organization is made on its ownership and appointment there, and then in SBP, this work is done by the government.

He said that the interest rate in SBP is decided by the Monetary Policy Committee which is appointed by the government.

He highlighted that the Current Account Deficit (CoD) issue was more prevalent in the previous governments, which have been largely resolved by the present government.

Federal Minister for Energy, Muhammad Hammad Azhar, said that Pakistan has a gas problem in winter because of which gas reserves in Pakistan are depleting day by day, due to which there is a gas shortage at the domestic and industrial level in the country.

The minister informed that no gas reserves have been discovered in the last few decades and “we have delivered gas across the country which is primarily a matter of supply and demand.”

He said that earlier gas reservoir deletion was up to 9 percent but now it has increased to 25 percent.

Briefing the media persons on the flagship initiative of ‘Sehat Card’, Special Assistant to the Prime Minister on National Health Services, Regulations and Coordination Dr. Faisal Sultan said it was the physical manifestation of a compact done by the state with its citizenry for their well-being.

He said the health care, which provided health insurance worth Rs one million to each family per year, was now launched in Punjab after its successful implementation in Khyber Pakhtunkhwa. Initially, relatively poor people were covered, but the entire citizenry was included under the initiative after thorough analysis.

From January 1, 2022, he said all the citizens having Azad Jammu and Kashmir, Gilgit Baltistan, Islamabad, and Punjab as the permanent addresses on their Computerized National Identity Card had been entitled to the health card.

Highlighting contours of the initiative, he said every individual was being covered through his or her family head which had been explained in light of the policy of the National Database and Registration Authority (NADRA).

He said a wide range of diseases that needed admission to the hospital was being covered under the health cards.

APP