- Finance Minister Dar says that all previous operations of the IMF have been completed.
- “We have taken great pains to meet the IMF’s conditions.”
- He further said, “No further burden will be imposed on the people.”
Finance Minister Ishaq Dar on Thursday assured that the coalition government – which has taken tough measures increasing the burden on the public – has no plans to impose new taxes on the agriculture and real estate sectors.
“I want to state clearly […] That no new tax will be imposed on agriculture or real estate. “We have had to suffer a lot to meet the conditions of the IMF,” Dar said in the National Assembly.
The International Monetary Fund (IMF) board approved a $3 billion bailout program for Pakistan, of which $1.2 billion was disbursed immediately, helping stabilize the South Asian country’s ailing economy.
Media reports suggested that the IMF had asked the government for a plan to tax the real estate and agriculture sectors – so that the balance could be released.
Dar said people associated with the agriculture sector – for which the government has increased the loan amount from Rs 1,800 billion to Rs 2,250 billion in the budget – are worried over the reports.
He added that all pre-actions stipulated by the lender had been completed, and the settlement with the IMF was done in a “transparent” manner.
“No further burden will be put on the people. All the commitments made with the IMF are on the website of the Finance Ministry,” he said.
The deal, which has already given some relief to investors in the country’s shares, exchange rate and bonds, will unlock more external financing.
Longtime allies Saudi Arabia and the United Arab Emirates have deposited $3 billion in Pakistan’s central bank in the past two days. China has taken a loan of more than $5 billion in the last three months to save the country from default.
Khaqan Hasan Najib, an economist and former advisor to the Ministry of Finance, said that both agriculture and construction, as also noted by the IMF, remain tax-free sectors in the country.
The economist said these sectors are important in broadening the tax base and improving progressivism.
In the case of real estate, he said, a true capital gains tax, levied at the marginal income tax rate of a person earning capital gains over the years, is something the country should start thinking about.
“It is also to re-incentivize investment from unproductive real estate to more productive sectors such as manufacturing,” Najib said.
Of course, he said, this now has to be done by a new long-term government that will take office after the upcoming elections.
“The provincial governments have jurisdiction over agricultural income tax, whose contribution to date is very low. Agricultural income tax, being a provincial subject, the provinces have to think of a progressive income tax on agriculture taking into account the size of agricultural holdings.”