IMF Calls For Pakistan To Redouble Tax Efforts
The International Monetary Fund has called on the Government of Pakistan to step up its efforts to expand its tax base.
The comments came from IMF’s Middle East and Central Asia Department Director, Masood Ahmed, during a recent visit to Islamabad and Lahore where he met with lawmakers, academics, and business leaders.
Reviewing Pakistan’s current economic climate, Ahmed said that immediate crisis risks had been averted. The economy is gaining strength, inflation is declining, and macroeconomic vulnerabilities have been addressed, he said. However, he added that further improvements should be targeted in the area of fiscal reform.
“The current improved economic and financial situation presents a unique opportunity for Pakistan to reinforce and build on recent stability gains to work towards achieving higher, sustainable and inclusive economic growth,” he said. “This will require further bolstering government revenues through broadening the tax base and improving compliance in order to generate the resources that will allow for further reducing public debt while increasing spending in priority areas such as public investment, health, and education.”
Earlier this month, the Federal Board of Revenue (FBR) said it had begun efforts to expand the taxpayer base and tackle persistently low tax compliance rates. To support these efforts, the agency has begun building a profile of prospective taxpayers based on their purchases. It said it had managed to secure revenues worth PKR570m (USD5.7m) from newly enforcing taxpayer obligations.
Widening the tax net and improving the economy was a key pledge in Prime Minister Nawaz Sharif’s election campaign, after increasing pressure on the nation from various international organizations and aid donors. According to official figures, less than one percent of Pakistanis paid income tax in 2012.
