Priyanka Tiwari
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Suspense crime, Digital Desk : Pakistan's government is facing intense scrutiny over its fiscal management after the country's latest Economic Survey revealed that tax exemptions and concessions granted in the past year totaled a colossal 5.85 trillion Pakistani rupees (approximately $21 billion). In a stunning disclosure, this figure is greater than the 5.67 trillion PKR the government paid to service its domestic debt during the same period.
The Pakistan Economic Survey 2023-24, a key pre-budget document, lays bare the extent of the country's revenue problem. The massive tax breaks highlight a system where preferential treatment and waivers for powerful sectors and individuals are draining the national exchequer, forcing the government to rely heavily on borrowing to meet its expenses.
A breakdown of the exemptions shows the scale of the issue across different tax categories:
Sales Tax: The largest contributor to the revenue loss was a staggering 3.88 trillion PKR in sales tax exemptions.
Customs Duty: Waivers on customs duties amounted to another 1.13 trillion PKR.
Income Tax: Concessions in income tax accounted for 840 billion PKR.
This revelation comes at a critical juncture for Pakistan, which is currently negotiating a new, more extensive bailout package with the International Monetary Fund (IMF). The IMF has long urged Pakistan to broaden its tax base and eliminate widespread exemptions to improve its fiscal health and reduce its reliance on foreign debt. The survey's findings will undoubtedly strengthen the IMF's position and increase pressure on Islamabad to implement tough and unpopular reforms.
The survey also painted a bleak picture of the broader economy, which grew by a meager 2.38% against a target of 3.5%. The fiscal deficit stood at 3.7% of GDP for the first nine months of the fiscal year, underscoring the gap between government revenue and expenditure.
As the government prepares to present its new budget for 2024-25, it is widely expected to introduce new taxes and slash the very exemptions highlighted in the report. The era of generous tax giveaways appears to be coming to a close as Pakistan confronts the harsh reality of its economic crisis under the watchful eye of its international lenders.
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