Finance Minister Ishaq Dar said on Thursday that the coalition government, which has imposed harsh measures that have increased the burden on the population, has no plans to impose new taxes on the agriculture and real estate sectors.
“I want to state unequivocally […] that no new tax on agriculture or real estate will be imposed.” “We have gone through a lot of pain to meet the IMF’s conditions,” Dar stated on the floor of the National Assembly.
The International Monetary Fund (IMF) board authorised a $3 billion rescue scheme for Pakistan, $1.2 billion of which was promptly disbursed, assisting the South Asian country’s weak economy to stabilise.
According to media reports, the IMF had asked the government for a plan to levy taxes on the real estate and agriculture industries in order to release the remaining funds.
Dar expressed concern about the reports regarding the agriculture sector, for which the government increased the loan volume from Rs1,800 to Rs2,250 billion in the budget.
He went on to say that the lender’s previous actions had been completed, and the agreement with the IMF had been done in a “transparent” manner.
“No additional burden will be imposed on the people.” “All IMF commitments are available on the finance ministry’s website,” he stated.
The deal, which has already brought some relief to investors in the country’s stocks, 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 last two days. China had rolled over $5 billion in loans in the last three months to save the country from default.
Khaqan Hassan Najeeb, an economist and former adviser to the finance ministry, said both agriculture and construction, as also noted by the IMF, remain under-taxed sectors in the country.
The economist noted that these sectors are important in broadening the tax base and improving progressivism.
On the real estate side, he said, a true capital gains tax, levied at the marginal income tax rate of the person making the capital gains over the years, is something that the country should start thinking about.
“This is also to re-incentivise investment from unproductive real estate into more productive sectors like manufacturing,” Najeeb noted.
Of course, he said, this is something to be done now by a long-term new government that will take office after the upcoming elections.
“Provincial governments have control over the agriculture income tax, which has made only a pittance so far.” Agriculture income tax is a provincial topic, so provinces must adopt a progressive income tax on agriculture, taking into account the extent of farm holdings.”
