The delay in firming up dates for the fifth review, which may lead to the release of the second/last tranche under the International Monetary Fund (IMF) Stand By Arrangement, rests with the government of Pakistan and not with the IMF, sources in the Ministry of Finance exclusively told this correspondent.
The last meeting with the PML (N) is scheduled for February 25, and the government has not yet abandoned hope of convincing the ''second largest party'' in parliament to support the ''General Sales Tax Bill 2010'' seeking implementation of the ''reformed general sales tax'' (RGST), sources added.
The General Sales Tax Bill 2010 was tabled in the National Assembly and Senate on November 12 but the government faced strong opposition from all political parties. MQM, ML-N, and PML (Q) opposed the RGST Bill. The key features of the Bill include a uniform GST of 15 percent on sales and purchase of goods compared to the present 17 to 25 percent, and is designed to bring additional revenue by doing away with exemptions - a major condition for the release of the second last tranche by IMF. The GST system aims at replacing the existing regime of sales tax and excise duty on services. There shall be no fixed tax, reduced tax, enhanced tax, retail price-based tax or special tax scheme under the new GST system.
The proposed GST system will certainly not generate any sudden increase in revenue. It will however, increase the overall tax-to-GDP ratio from the present below 10 percent to about 12 percent in the next 3-5 years. Sources confirmed that the meeting with the IMF team, for whenever the dates are firmed up, would take place in Dubai, and not in Pakistan. This is indicated by the travel advisory already issued by the IMF to the government.
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