By Mahmood Khalid <\/p>\n\n\n\n
The National Assembly<\/a> has just passed the Finance Supplementary Bill, 2021<\/a> along with other legislative bills. The need for this supplementary bill was felt after the IMF 6th<\/sup> Review Mission<\/a> \u2013 October 4-19, 2021. It is reported that the demand of IMF was PKR 700 Billion in lieu of GST expenditures reduction which was conceded upto PKR 343 Billion. Besides this FBR also introduced new revenue measures in this Finance Supplementary Bill through changes in Income Tax Ordinance 2001 estimated at PKR 5 Billion (which includes increase in Advance Tax on vehicle registration to discourage own-money premium advocated by PIDE[1]<\/a><\/sup>) and Federal Excise Duty based revenue measures of PKR 6.5 Billion. We can assume some of the other revenue measures are positive in value but so far no figure is apparent. <\/p>\n\n\n\n Earlier there was much debate on whether Pakistan should accede to the demands of IMF or not. This debate is persisting for quite some time and is back again after the passing of the Act for the Mini Budget (Finance Supplementary Bill) from parliament. Dr. Nadeem Ul Haq<\/a> (VC-PIDE) critically appraised[2]<\/a><\/sup> the earlier debate at the time and concluded \u201cThe decision, is not whether to go to the IMF or not. It is whether to move from colonial Raj to the twenty first century. For that we need to undertake a lengthy and careful agenda of economic, administrative, legal and social reform<\/em>\u201d. However the essential reforms that we need for a buoyant and sustainable revenue generating system are missing once again. <\/p>\n\n\n\n PIDE has been extensively debating on these potential tax reforms along with evidence-based revenue impact [3]<\/a> [4]<\/a> [5]<\/a>. More recently PIDE Growth Commission<\/em> has identified [6]<\/a> potential reforms which are pro-growth and business friendly. These include a list of taxation reforms as well. But one sees no concrete debate leading to legislation of critical reforms in revenue raising methods. The debate must be on the overall tax policy design to make it more business friendly and pro-growth and not just on the measures suggested by the current supplementary bill.<\/p>\n\n\n\n About the author: Mahmood Khalid<\/a> is Senior Research Economist<\/a> at PIDE.<\/p>\n","protected":false},"excerpt":{"rendered":" Mahmood Khalid shares his thoughts on the new Finance (Supplementary) Bill 2021, and suggests that budgets provide an insight into the policy framework of the current government. Mini budgets are critical as they are presented due to some urgent need to reform. Unfortunately in Pakistan the need to reform for our major policies are not driven by the actual need as identified by extensive research and academic debate. PIDE has been arguing for critical Tax Policy Reforms, however less heed is paid to the potential reforms which are more revenue buoyant and growth friendly.<\/p>\n","protected":false},"author":2,"featured_media":1570,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1,7,453],"tags":[493,505,506,504,139],"yoast_head":"\n
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