Skewed tax policy

IN a statement before the National Assembly on Friday, Finance Minister Ishaq Dar rebuffed reports that the government was planning to impose new taxes on the agriculture and construction — including real estate — sectors. A day later, he insisted that the taxes on these two sectors agreed with the IMF for its new $3bn loan, and widely reported in the media, had already been implemented in the budget for this fiscal year. “I want to categorically state that no new tax will be imposed on the agriculture and construction sectors … we have already endured the pain, and met all prior actions of the IMF programme,” he told parliamentarians. The budget is estimated to generate additional revenues of Rs80bn by increasing the tax rate for builders and developers and non-filers on the purchase and sale of immovable property and second homes. The changes in the rates were part of the government effort to secure the IMF bailout by raising additional tax and non-tax revenues during the present financial year to meet the programme goal of producing primary surplus equal to 0.4pc of GDP, as well as strengthen tax collection to 10.3pc of GDP.