IMF wants a more powerful FBR

The International Monetary Fund (IMF) has proposed giving the Federal Board of Revenue (FBR) the authority to collect provincial taxes as part of a new loan programme for Pakistan. The proposal aims at bringing transparency to provincial expenditures and enhancing provincial tax collection capabilities.

According to sources within the Ministry of Finance, the IMF has requested new proposals regarding transparency in provincial expenditures for the new programme.

They said the IMF has recommended digitizing both federal and provincial budgets for the upcoming fiscal year, and new proposals are being prepared to ensure the proper utilization of development budgets by provincial governments.

Budget digitization is expected to help control the difference between revenues and expenditures. The IMF has also demanded that the FBR be tasked with collecting provincial taxes, stating that provincial authorities are unable to fully collect taxes on various services due to various reasons.

According to sources within the Ministry of Finance, provincial governments have been unable to devise a mechanism for the collection of agricultural income taxes over the past 16 years.

There is intense pressure from the IMF to bring the agricultural sector into the tax net, with the belief that bringing the sector into the tax net will lead to a significant increase in tax revenue. All provincial governments are reportedly willing to provide full cooperation for the new IMF programme.

Digitizing the budget refers to the process of converting traditional paper-based budget documents and processes into digital formats. This involves using digital tools and technologies to create, manage, analyze, and present budgetary information.