Lawmakers ask IMF to ease pace of adjustments; oppose centralisation of tax on services – Newspaper

ISLAMABAD: The parliamentarians opposed on Wednesday the measure proposed by the government to centralize the sales tax on services for being against the constitution and asked the International Monetary Fund (IMF) to relax the economic objectives established under the facility Extended fund of $ 6 billion that was negatively affecting businesses and people in the country.

However, the IMF mission expressed satisfaction with the government's macroeconomic policies, including taxes, exchange rates and interest rates to get the country out of the challenges.

This was the crucial point of a joint meeting of the Senate Standing Committees and the National Finance and Revenue Assembly with a mission of the IMF visiting staff led by Ernesto Ramírez-Rigo.

The Secretary of Finance, Naveed Kamran Baloch, led the government side in the absence of the Prime Minister's Financial Advisor, Dr. Abdul Hafeez Shaikh.

The members of both chambers asked to rationalize the pace of stabilization and adjustment to minimize shocks to people, businesses, industry and the economy and reduce interest rates to help create jobs and generate income.

They also asked that the revenue collection objective for the year be relaxed, while suggesting that interest rates and the reform process should be gradual.

PML-N MNA Aysha Ghaus Pasha said the delegation heard their demands but did not commit anything.

Shortly after the meeting, the chairman of the Senate Standing Finance Committee, Farooq H. Naik, said the IMF delegation repeatedly clarified that it was not the IMF program but the government program itself that was currently being implemented. .

“Therefore, we should not blame the IMF too much; we have to deal with the government. "

He said that the most important thing that is being introduced now is the centralization of the sales tax on services.

He said that the collection of service sales tax is a provincial domain under the constitution after the 18th amendment, but as part of the proposed Pakistan Revenue Authority (PRA), they are trying to centralize it so that the provinces have to depend of the federation.

"If this is done, or if the IMF gives it priority and pressures it or if the government accepts it, it will be a violation of the constitution and will undermine the rights of the provinces," he said at the meeting.

The service sales tax was a provincial or state issue in other countries and, likewise, the provinces of Pakistan had also introduced tax laws, he added. "You cannot abolish these laws and if you try to do so it will be a violation of the relevant entries in the federal legislative list of the constitution."

Naik said the delegation was also explained that with the existing level of high interest rates and inflation, investments could not be made, businesses could not be managed and, therefore, employment could not be created and that is exactly what What is happening in the country. Present.

He said people were losing jobs, that gas and electricity rates had increased by 60-70 percent and that essential groceries had become more expensive by 15-20pc and the middle class was being eliminated.

A PML-N MNA, Qaiser Shaikh, said the IMF team was satisfied with the government's performance and economic policies and believed that everything was going well.

He said members complained about the high interest rates that were affecting businesses and industry and other policies that were affecting the condition of the common man.

He said they told the mission that the government was taking credit for the contraction in the current account deficit, but it was not an achievement since the maximum reduction was made by squeezing out imports that had in fact blocked industry and business. .

Success would have been commendable if the current account deficit were achieved through export growth to guarantee entries that do not generate debt.

In addition, he said, the mission was told that the revenue target of Rs5.550 billion was unrealistic to begin with given the insignificant economic growth. Therefore, the objective should be reduced by at least Rs500-600bn.

"But they were satisfied with everything and believed that the plan was moving as planned," Shaikh said.

PPP MNA Sherry Rahman said that while listening to IMF responses on how growth would be achieved, debt can be reduced and inflation controlled, he received the impression that the entire film was being screened elsewhere.

She said the IMF should not be expected to show its lack of satisfaction at this early stage, but then the government was responsible to the people and not to the IMF.

She said that all sectors of society were suffering due to prevailing economic policies, adding that interest rates, inflation, taxes, energy prices and exchange rates had made the life of farmers , workers and daily wage earners were miserable, since their purchasing power had been drastically compromised. .

Posted in Dawn, November 7, 2019