Pakistan Once Gain Advised to Raise Tax Revenues

April 10, 2014 Taxation in Pakistan

taxes and equality in PakistanISLAMABAD – The government of Pakistan needs to raise tax revenues, but any efforts to boost collections should not be implemented without also considering the social impact they will have.

Despite the fact that the government of Pakistan has already made marked progress in reducing the national budget deficit, more work still needs to be done to improve tax collections, to stabilize medium-term growth, and to protect low-income citizens from the negative economic fluctuations, according to the conclusions outlined in the Program Notes on Pakistan published by the International Monetary Fund on April 7th.

In its newly published analysis the IMF showed that the government of Pakistan has managed to shrink the national budget deficit by 3.3 percent this year, to a level of 5.5 percent, and they can now divert more effort to raising tax revenues, in order to increase expenditures on vital social programs and infrastructure development, while reducing the country’s reliance on foreign aid.

The IMF recommended that “…the central bank must stabilize and rebuild its foreign exchange reserves, making use of Fund disbursements, financial support from other donors, foreign exchange intervention, and exchange rate flexibility.

The Notes also indicated that “…it is a top priority of the government to protect the poor from direct and indirect impacts of fiscal consolidation and price adjustments by means of targeted income support.”

Photo by: Mark Hodson