Tough measures: IMF suggests increase in sales tax rate to trim deficit
ISLAMABAD:? The International Monetary Fund (IMF) has asked Pakistan to withdraw untargeted subsidies, raise the sales tax rate and reintroduce income surcharge and special excise duty after finding out that the country has understated its expenditures and overstated receipts. The IMF, in a detailed report on Pakistan’s economy, revealed that the country has understated expenditures by Rs317 billion and overstated revenues by Rs215 billion to hide a deficit of Rs532 billion. The report was compiled after a review of the economy under Article-IV . Against total budget outlay of Rs3,753 billion, approved by parliament, the IMF has put expenditures at more than Rs4,070 billion, with a gap of Rs317 billion. Similarly, receipts (both tax and non-tax) have been estimated at Rs2,878 billion while IMF assessment puts them at Rs2,663 billion. The IMF assessments are close to what independent economists have been saying since the beginning of the current fiscal year in July 2011. Despite attempts, finance ministry officials were not available for comments. The IMF has worked out budget deficit at Rs1,443 billion against government’s estimate of Rs985 billion.
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Tough measures: IMF suggests increase in sales tax rate to trim deficit
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