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Pakistan

Govt adamant on bringing agriculture into tax net: Aurangzeb

  • Finance Minister says every segment has to play its part
Published July 30, 2024

Federal Minister for Finance and Revenue Muhammad Aurangzeb brushed off concerns over the government’s plans to bring the largely under-taxed agriculture sector into the revenue net, stressing that Islamabad’s hand has now been “forced”.

“I am grateful to the chief ministers for agreeing to legislate taxation on the agriculture sector,” said Aurangzeb as he addressed state media at the Karachi Chamber of Commerce and Industry on Tuesday.

“However, neither you (industrialists), nor the International Monetary Fund (IMF) is willing to accept that the government will be able to achieve this.

“Our hand has now been forced because we have reached a level where if we don’t expand the net and bring the under-taxed, untaxed sectors into the economy, we are at the end of the road,” he said.

‘China will help secure IMF loan’

Aurangzeb said industrialists and the IMF “were skeptical” regarding the imposition of taxes on retailers.

“Every segment has to play its part. If we don’t, we will keep going back to the industrialists and the salaried class for more taxes,” he said.

Talking about the cut in the key policy rate, Aurangzeb maintained that “this is the prerogative of the central bank.”

“I think it’s a step in the right direction. My personal view is looking at the inflation rate, even if it ticks up a little bit there is still room for the central bank to reduce it on a gradual basis,” he said.

The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) on Monday reduced the key policy rate by 100 basis points, taking it to 19.5%, its second successive decision of a cut.

Aurangzeb admitted that a high interest-rate regime, alongside the element of taxation and energy cost, are issues that need to be addressed.

“The path of growth can only be achieved through the permanence of macroeconomic stability,” he said.

“The Prime Minister has maintained that this will be the last IMF programme,” he said.

Fault lies within: to fix the economy, look inward

Aurangzeb said that the structural issue of Pakistan’s economy is “as soon we accelerate the growth rate, we face balance of payments issue”.

He added that export-led growth is the only way forward, citing agriculture and IT as potential sectors of growth.

Pakistan is looking for external financing avenues: Aurangzeb

The finance minister admitted that it is a “failure of the government” for not maintaining fiscal discipline “due to which the banks continue to lend to the government”.

“Ultimately, it has to be the private sector, which has to lead this country. It has to be private sector credit, which has to come in.

“Therefore, I have told the banks not to go towards directed lending but continue to lend farmers SMEs on a cash-flow basis,” he said.

Comments

200 characters
KU Jul 30, 2024 05:16pm
Farmers ask the govt about their wheat crop low price plunder n losses, they have sold assets to pay back loans, who is going to compensate them?
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Retired Jul 30, 2024 05:58pm
I'm beginning to get the feeling our FM is dense with no understanding of ground realities. Mark my words, there will be no Agri tax. Even if there is one, it'll be few hundred rupees per acre.
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Aamir Jul 30, 2024 06:22pm
And who will pay the farmers Incase of natural calamities and diseases and floods etc. Agriculture is NOT an INDUSTRY and is infact subsidized by govts. Now thet want to ruin Agriculture
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Az_Iz Jul 30, 2024 07:23pm
Retail and wholesale traders definitely need to be brought into the tax net for sure.Digitalization of payments, using QR code will be necessary along with phasing out big currency notes.
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zh Jul 30, 2024 07:58pm
Aurangzeb is adamant to bring the agriculture in the tax net but in the budget he did not do it.
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Orbital Chimps Jul 31, 2024 12:04am
You can’t stabilise economy and broaden tax net until larger denomination bills like 5,000 and even 1,000 are withdrawn and replaced with digital currency.
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Orbital Chimps Jul 31, 2024 12:05am
@Aamir , they are talking about tax on income rather fixed tax on per acre of land. Not all lands produces same and hence fixed tax will not stay longer, if imposed.
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Captain James T KIRK Aug 01, 2024 10:47am
Flat 5% tax on individuals. Flat 25% tax on all companies and corps. Any entity/individual (and immediate relarives) employing more than 5 people will be considered company. Everyone will pay
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