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hands of the IMF list of requirements for credit recovery

ISLAMABAD:

The head of the Pakistan Revenue Service hinted on Tuesday with an increase in income tax rates for above-average incomes go to wealthy groups, as presented by the International Monetary Fund (IMF) list of his demands for additional measures, including surge in personal income tax rates.

The IMF objected to the reduction of income tax rates for employees, “but we are trying to protect people”, who earned Rs 200,000 per month from any additional burden, Federal Council of This was stated during an informal conversation by the head of the revenue department, Asim Ahmad. with in media.

Ahmad spoke to media after attending a meeting of Senate Standing Committee on Finance in the Houses of Parliament. He said that government was in a fix because the number of people, who earned more more than 200,000 rupees a month was not that much.

“Low number of peoplefall in higher income levels do not provide a sufficient basis to meet the requirements of the IMF. demand for receiving additional income from hired labor, ”the chairman of the FBI told reporters.

in budget 2022-23 government reduced tax burden on hired class and provided relief of Rs 47 billion by increasing the annual income tax exemption cap to Rs 1.2 million and lowering individual tax rates. However, the IMF demanded an increase in tax burden to create additional over 120 billion rupees from employees.

Last year1.2 million employees paid the amount of 150 billion rupees in income tax on an average of 135,000 rupees per person. About 730,000 people who submit your annual tax returns have fallen in annual income bar of Rs 1.2 million which is now released. Nearly 1 million tax returns earn up up to 2 million rupees per year year. This leaves a very narrow base for in government to collect additional taxes.

According to budget, government proposed 12.5% ​​income tax rate for those who earn more than 2.4 million rupees, but up up to 3.6 million rubles From 3.6 million to 6 million rubles. new proposed rate will be 17.5% and for income tax from 6 to 12 million rupees rate was proposed at the level of 22.5% and for those who earn more than 12 million rupees, offered rate is 32.5%.

Sources said that government worked on proposal to revise tax rates for those who earn 3.6 million rupees and above.

Read Pakistan to default if subsidies not lifted by July: Miftah

In a statement on Monday, Esther Perez, Resident Representative of The IMF has said more action will be needed to budget for fiscal year 2022-23 in line with in key goals of $6 billion program.

On request of Ministry of Finance, the sources said, the IMF handed over over a list of additional steps Pakistan had to take to convince the IMF on viability of proposed budget and revival of program.

BUT senior government the official said that the IMF main fears were caused by personal income tax rates, continued of fuel and electricity subsidies and reliability of in budget numbers.

The IMF asked Pakistan to show primary budget excess, which government reflected at the level of 152 billion rupees. for in next fiscal yearbut global the lender doubts the reliability of these numbers. Furthermore, the provincial budgets presented so far make this total primary surplus of Rs 152 billion unrealistic.

Abdul Rehman Warraich, former director general debt in the ministry of Finance, said on Tuesday that four variables are needed for sustainability of debt: real GDP growth rate, real cost of borrowing, real exchange rate and primary balance.

Speaking at a webinar hosted by KASB Securities, Warriah emphasized that the right combination of these variables were needed for stable debt levels. He said that cost of borrowing should be lower than real GDP growth rate and what currency should No experience big fluctuations. “Because of the high debt level, country should run primary surplus to ensure debt drops to a sustainable level,” he said. added.

Pakistan cost of borrowing fluctuated between 4% and 5% of GDP and is set cross 5% in 2022-23 after a sharp rise in interest rates. Warriach stressed that this increase is a matter of concern, given that an acceptable budget deficit for Any economy amounted to 3% of GDP.

Borrowing costs in Pakistan are relatively high – currently around 16% – and the interest expense to income ratio has increased. already passed the 80% mark.

As a service to the interests of Pakistan already exceeds 5% of GDP, Warreich suggested that all signals were pointing to tighter fiscal discipline on the part of the federal government. government. He suggested that in a few years of primary surplus. in tandem with high profitability growth rates, will significantly improve the situation of Pakistan financial health.

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Derrick Santistevan
Derrick Santistevan
Derrick is the Researcher at World Weekly News. He tries to find the latest things going around in our world and share it with our readers.

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