‘Saved public from many more taxes’, PM on budget made in line with IMF demands

• IMF wanted agriculture sector to be taxes, says PM Shehbaz.
• He says Fund wanted tax on charity hospitals’ medical equipment.
• Premier claims that hike in petroleum prices not related to IMF.
  

LAHORE/ISLAMABAD: Prime Minister Shehbaz Sharif has said that though it was tough to make a budget as per the direction of the International Monetary Fund (IMF) and that the government saved the masses from many more taxes, The News reported on Sunday.

“I had long discussions on each point and the matter was settled and no more taxes were imposed on agriculture and fertilisers,” PM Shehbaz said revealing that the Fund wanted more taxes on agriculture, fertiliser and other domains including medical equipment — even those for charity hospitals.

It is to be noted that President Asif Ali Zardari on Sunday greenlighted the tax-heavy Finance Bill 2024, which will go into effect from July 1, which marks the beginning of the next fiscal year.

The federal government presented the tax-loaded Rs18.877 trillion budget for the fiscal year 2024-25 (FY25) two weeks ago and it was duly passed by the National Assembly on Thursday earlier this week.

The FY25 budget comes in the backdrop of the Pakistan Muslim League-Nawaz (PML-N) led coalition government’s efforts to meet the prerequisites for an additional — longer and larger — IMF programme by setting a high tax revenue target taking a shot at lowering the fiscal deficit from 7.4% to 5.9%.

Earlier, The News reported that although the Washington-based lender ha agreed on abolishing the goods and services tax (GST) on textbooks, restoring rebates for professors, and researchers, withdrawing Federal Excise Duty (FED) on cement and some other technical changes; it has refused to allow the government to restore export proceeds into a fixed-income tax regime, as the exporters were lobbying hard against going into a normal tax regime.

Meanwhile, the Centre has also introduced reforms in the pension scheme to initiate a gradual reduction in superannuation liabilities.

Speaking to The News, the prime minister acknowledged that the government was under pressure from the Fund and that had the government accepted all directions of the IMF, there would have been more burden on many sectors, which would have increased difficulties for the government.

He revealed that the IMF wanted medical equipment to be taxed — including the one for charity hospitals.

“I convinced them in this regard and such taxes were not imposed,” he said.

Highlighting that the government and the lender agreed on taxes after difficult “long discussions”, the PM reiterated his commitment to strengthening the country’s economy and highlighted the positive indicators for investment opportunities.

“We will fulfil the dream of a strong economy; there are clear and positive messages of investment in Pakistan by the friendly countries,” he noted.

Furthermore, PM Shehbaz also expressed his optimism that it would be Pakistan’s last agreement with the IMF and the budget under it, after which people would get more relief.

Referring to the reduction in inflation from 36% to 11%, the premier said that he hoped that it would further decrease in the coming months.

Responding to a question, he clarified that the issue of petroleum price hikes and levy increases was not related to the IMF and it was related to the incumbent government.

His remarks came as the government has increased the levy on petrol and diesel from Rs60 per litre to Rs70 per litre.

Additionally, a levy of Rs50 per litre would also be imposed on light diesel oil and kerosene oil, while Rs70 per litre levy would be applicable on high-octane. 

Furthermore, in response to a question, the prime minister also lamented the “regrettable” role and reaction of the opposition parties to the National Assembly’s resolution in response to that passed by the United States House of Representatives demanding an investigation into the February 8 elections.

‘Cannot compromise’ on sovereignty

He said Pakistan is a sovereign and independent country and “this policy of ours is very important for us. We cannot compromise on it”.

His comments refer to the US House Resolution 901 wherein an overwhelming majority, voted to demand a “full and independent investigation of claims of interference or irregularities” in the polls.

The resolution HR 901 was passed by a massive 368 against seven votes on Tuesday, which makes 85% of the total American lawmakers in the legislature.

The move triggered a strong response from Islamabad, with the Foreign Office saying it “stems from an incomplete understanding of the political situation and electoral process in Pakistan”.

Additionally, a counter tit-for-tat resolution was passed by the Lower House on Friday to condemn the US Congress resolution and termed it “contrary to facts” and “interference” in its internal affairs.

The Pakistan Tehreek-e-Insaf (PTI) backed Sunni Ittehad Council (SIC) lawmakers opposed the resolution, chanted slogans of “Cipher-Cipher” and “Shame-Shame” in the House, as well as tore the resolution copies.

Commenting on the treasury’s resolution, PTI Chairman Barrister Gohar Ali Khan told journalists outside the Parliament House today that the government did not read the US Congress’ resolution properly which demanded to ensure the provision of human rights and transparent polls.

He was of the view that the resolution passed by the US House of Representatives could not be termed as “foreign intervention”. However, it exposed the incumbent government’s intent for not holding an investigation into the 2024 nationwide elections.