ISLAMABAD: Pakistan’s tax-to-GDP ratio rose to 10.8% in the second quarter of the 2024-25 fiscal year, a statement from the Senate Standing Committee on Finance and Revenue said on Thursday, below the target of 13.6% agreed with the International Monetary Fund (IMF) when it approved a $7 billion bailout loan for the cash-strapped country last year.
The South Asian nation is navigating a challenging economic recovery path buttressed by the 37-month loan program that comes with tough measures especially on the taxation front, such as broadening the tax base to include previously undertaxed sectors such as agriculture, industrialists, and developers, abolishing exemptions and bringing the retail, agriculture, and export sectors into the normal income tax regime and imposing new taxes on the construction and sale of buildings and plots, and on milk and lubricating oil.
The bailout has also called for increasing the tax rate on farm income, continuing fiscal consolidation to reduce the deficit and improve fiscal discipline, improving tax administration and compliance, strengthening federal-provincial institutional arrangements and improving public investment management.
“The tax-to-GDP ratio has risen to 10.8% in the second quarter [of FY24-25], up from 9.5% in the first quarter, although it remains below the IMF-agreed target of 13.6% by the end of the program,” said a press release after the Senate Standing Committee on Finance and Revenue met on Thursday. “By comparison, India’s tax-to-GDP ratio stands at 18%.”
During the meeting, the committee was briefed on Pakistan’s current revenue shortfall of Rs384 billion for the first half of the fiscal year. The FBR collected Rs5,624 billion in taxes, falling short of the targeted Rs6,008 billion.
Senator Saleem Mandviwala, the chair of the committee, expressed concerns over the Federal Bureau of Revenue’s handling of sales tax collection.
Finance Minister Muhammad Aurangzeb responded by highlighting ongoing reforms, including a move to simplify income tax forms for salaried individuals and a push for transparency in tax collection through technological innovations.
Aurangzeb also discussed the government’s intention to separate tax policy from FBR operations in the next financial year, aiming to ease the burden on the salaried class.
“We are taking steps to keep the tax form simple and easy,” he added.
The committee also stressed the need for reforms to reduce the administrative burden on taxpayers while ensuring that tax collection remained “efficient and fair.”
The possibility of converting certain taxes into a carbon tax, a proposal raised by Senator Sherry Rahman, was also discussed.
“While the finance minister acknowledged the World Bank’s 10-year $20 billion Country Partnership Framework, which includes climate and carbon concerns, some members, including Senator Farooq H. Naik, raised concerns about the impact of a carbon tax on inflation and its effect on the poor,” the statement said.
Under the IMF deal, the highest effective tax rate on farm income can rise to as much as 45% from the current 15%. It will be implemented from this year, a move that was termed “unprecedented” by brokerage and investment banking firm JS Global at the time the loan was approved last year.
“These changes could contribute to inflation, particularly in food prices, affecting consumers nationwide,” said Ghasharib Shaokat, head of product at Pakistan Agriculture Research, adding that larger farmers will be affected more.
Inflation averaged close to 30% in FY23 and 23.4% in FY24, which ended on June 30. The consumer inflation rate slowed to 4.1% year on year in December, the lowest in more than 6.5 years.
Prime Minister Shehbaz Sharif’s government is based on a weak coalition and faces political pressure from the party of popular jailed opposition leader, former premier Imran Khan.
But Sharif says his government is committed to the tough but unavoidable reforms mandated by the IMF.
Pakistan has been struggling with boom-and-bust cycles for decades, leading to 22 IMF bailouts since 1958.
Pakistan tax-to-GDP ratio rises 10.8% in FY25 second quarter, below IMF target
https://arab.news/jcu23
Pakistan tax-to-GDP ratio rises 10.8% in FY25 second quarter, below IMF target
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- Pakistan navigating challenging economic recovery path buttressed by $7 billion IMF program that comes with tough measures
- Senate Standing Committee of Revenue expresses concerns over Federal Bureau of Revenue’s handling of sales tax collection
Pakistanis gather to watch India clash on big screen
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- Encounters between the two countries bear the scars of four wars and rank among the most-watched sporting events
- Those watching in Karachi expressed disappointment because the game was originally meant to be played in Pakistan
KARACHI: On a sandy tract of land along Karachi’s coastline, hundreds of Pakistani cricket fans gathered in front of a big screen to watch their cricket team battle arch-rivals India in the Champions Trophy on Sunday.
Encounters between the two countries bear the scars of four wars and rank among the most-watched sporting events in the world.
Those watching in Karachi expressed disappointment because the game was originally meant to be played in Pakistan until India refused to travel across the border, citing government advice.
“My dad is a fan of cricket. He’s obsessed... ever since he found out he said he wanted to watch so I found this screen,” said Awal Khan, 40, who works as a cook and paid nearly $2 to travel to the venue, a high cost for most Pakistanis.
“I don’t like that India didn’t come... I’ve never been to the stadium but if India comes to Pakistan I will definitely go.”
For more than a decade, Pakistan and India have played only in multi-team events because of a strained political relationship. Pakistan went to India for the 2023 ODI Cup and expected India to return the favor by touring for the Champions Trophy.
Their once closely contested rivalry has grown more one-sided over the years. India have prevailed in seven of the eight completed ODIs in the last decade against Pakistan, with their last loss coming in the final of the previous Champions Trophy in 2017.
“We’re excited about the Champions Trophy but double excited for the Pakistan-India match,” said Raheel Sayeed, a 28-year-old engineer.
“I don’t think I’ll see Pakistan versus India in Pakistan any time soon. Both governments don’t want peace, especially India.”
Along another stretch of the Arabian Sea on an upscale promenade, hundreds more were slowly growing dejected as India took control of the match.
“If Pakistan loses I’ll be sad. But we have to have hope and we have to pray. But prayers aren’t enough,” said Zakira Bilal, 26, who came to watch the broadcast with her three young children.
“On our way here in the rickshaw, we discussed how Pakistan shouldn’t go to India to play when they don’t come here. Self-respect should be there.”
Pakistan sends 100 tons of relief supplies for war-affected Palestinians
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- This is the 14th humanitarian relief consignment for Palestine, reinforcing Pakistan’s support for the people of Gaza
- Israel’s war on Gaza, which began after Oct. 2023 attacks by Hamas, has killed over 48,000 people, injured thousands more
ISLAMABAD: Pakistan’s National Disaster Management Authority (NDMA) has sent another aid consignment for Palestinians that carried 100 tons of essential supplies, the Pakistani government said on Sunday.
This is the 14th humanitarian relief consignment for Palestine, which reinforces Pakistan’s unwavering support for the people of Gaza, according to Pakistan’s Press Information Department (PID).
This shipment is part of Pakistan’s ongoing humanitarian efforts and marks the 25th overall relief consignment sent to people affected by Israeli military actions in the Middle East.
The latest consignment comprised essential relief supplies, including bell tents, winterized tents, tarpaulin sheets and medical tools.
“The aid was transported via a chartered flight from Jinnah International Airport, Karachi, to El Arish International Airport, Egypt, for onward delivery to Gaza,” the PID said.
Israel’s war on Gaza, which began after Oct. 2023 attacks by Hamas, has killed over 48,000 people, injured thousands more and displaced almost all of the 2 million population of the territory.
Pakistan has so far dispatched a total of 1,478 tons of relief aid exclusively for Palestine, demonstrating the country’s continued commitment to supporting the people of Gaza in these difficult times, according to the PID.
Overall, the South Asian country has dispatched 1,961 tons of humanitarian aid, including 372 tons for Lebanon and 111 tons for Syria.
“The Government of Pakistan remains steadfast in its commitment to standing with the people of Palestine and will continue to provide humanitarian assistance based on the evolving needs of those affected by the ongoing crisis,” the PID said.
Pakistan does not recognize nor have diplomatic relations with Israel and calls for an independent Palestinian state based on “internationally agreed parameters.”
The South Asian country has also called on Israel to withdraw from Lebanese and Syrian territories, including Golan Heights, and allow United Nations (UN) peacekeepers to freely operate in the region to ensure compliance with international agreements.
Pakistani security forces kill seven militants in separate encounters in volatile northwest
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- The deceased militants belonged to Pakistani Taliban who have stepped up attacks against security forces in recent months
- Pakistan accuses Afghanistan of sheltering militant groups behind attacks in its western regions, a charge denied by Kabul
ISLAMABAD: Pakistani security forces have killed seven militants in two separate engagements in the northwestern Khyber Pakhtunkhwa (KP) province, the Pakistani military said on Sunday, amid a surge in militant violence in the region that borders Afghanistan.
The first operation was conducted in Daraban area of KP’s Dera Ismail Khan district in which four militants were killed, according to the Inter-Services Public Relations (ISPR), the military’s media wing.
Three other militants were killed in a second encounter in Maddi area of the same district.
“Weapons and ammunition were also recovered from the khwarij [Pakistani Taliban militants], who remained actively involved in numerous terrorist activities in the area,” the ISPR said in a statement.
“Sanitization operations are being conducted to eliminate any other kharji found in the area.”
The South Asian country brands the Pakistani Taliban, or the Tehreek-e-Taliban Pakistan (TTP), fighters as “khwarij,” a historical reference to an extremist sect in early Islam known for rebelling against authority, declaring other Muslims as apostates, and justifying their killing.
Pakistan has seen a surge in militancy in KP since a fragile truce between the Pakistani Taliban and the state broke down in November 2022. The militants have stepped up attacks against police and security forces in recent months, with the military reporting deaths of 383 soldiers and 925 militants in various clashes in the country in 2024.
The latest operations came more than a week after militants killed an army officer and three soldiers in a shootout in KP’s North Waziristan district, according to the military.
Islamabad has frequently blamed the surge in militancy on Afghanistan, accusing it of sheltering and supporting militant groups that launch cross-border attacks. Afghan officials deny involvement and insist that Pakistan’s security issues are an internal matter of Islamabad.
Pakistan closes key border crossing with Afghanistan over ‘construction of trenches’ by Taliban authorities
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- The development comes at a time of strained ties between Pakistan and Afghanistan over a surge in militants attacks in Pakistan’s western provinces
- The closure of Torkham border crossing in Pakistan’s Khyber Pakhtunkhwa has suspended movement of pedestrians as well as trucks carrying trade goods
ISLAMABAD: Pakistan has closed a key crossing on its northwestern border with Afghanistan over the “construction of trenches” near the frontier, a Pakistani police official said on Sunday, which has led to the suspension of cross-border movement.
The Torkham border crossing was closed late on Friday night, when Afghan Taliban authorities initiated “construction of trenches and other development work” along the border, according to Naheed Khan, a senior police official in Pakistan’s Khyber district that borders Afghanistan.
The closure of border crossing by Pakistani authorities has resulted in suspension of movement of pedestrians and trade between the two neighboring countries, but there were no reports of skirmishes between the two sides.
“It [Torkham crossing] is closed both for pedestrians and heavy vehicles since 12 at night on Feb. 21. No firing is reported from either side,” Khan told Arab News.
“Some families of Bacha Mina, a dusty village near the border on Pakistani side, have left the area for safer places to dodge any eventuality. Also some loaded trucks have returned to Jamrud Bazaar.”
There was no immediate comment from the Afghan side on the closure of the key border crossing.
The development comes at a time of strained ties between Pakistan and Afghanistan over a surge in militants attacks in Pakistan’s western provinces that border Afghanistan.
Islamabad has frequently accused Afghanistan of sheltering and supporting militant groups that launch cross-border attacks. Afghan officials deny involvement and insist that Pakistan’s security issues are an internal matter of Islamabad.
In the past, border clashes between Pakistani and Afghan forces have led to the closure of key crossings like Torkham and Chaman, severely disrupting trade and halting the movement of people between the two countries.
In August, the Torkham border was shut down for three days after the Afghan Taliban announced they were investigating reports of Pakistani fighter jets allegedly violating Afghan airspace in Nangarhar and Kunar provinces.
Tensions escalated again between the two countries in December, following reports of Pakistani airstrikes targeting alleged militant camps in Afghanistan. Afghan officials reported the strikes resulted in civilian casualties.
Punjab screens high-voltage India-Pakistan Champions Trophy match at 44 prisons across province
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- The South Asian heavyweights are playing at Dubai International Cricket Stadium as India refused to travel to Pakistan
- The screening at Punjab prisons is part of Prison Reforms Policy to make inmates better citizens, home department says
ISLAMABAD: Pakistan’s Punjab province has arranged for screening of the much-anticipated India-Pakistan Champions Trophy match at 44 prisons across the province, the Punjab home department said on Sunday.
Pakistan skipper Mohammad Rizwan won the toss and elected to bat in the blockbuster clash against India in Dubai on Sunday as his side looked to stay alive in the tournament.
Defending champions Pakistan lost the tournament opener to New Zealand and another defeat will virtually end their chances of making it to the semifinals.
Punjab Home Secretary Noorul Amin Mengal had directed the provincial prison authorities to make special arrangements for the screening of the match for inmates.
“Positive activities are being promoted to make prisoners better citizens under the Punjab chief minister’s Prison Reforms Policy,” the home department said in a statement.
“Special arrangements were also made in juvenile prisons for live broadcast of cricket matches. Children dressed in Pakistani cricket team uniforms enjoyed the match.”
The arch-rivals are playing at the Dubai International Cricket Stadium after India refused to travel to Pakistan to play their matches. The last time these two sides met in the Champions Trophy was back in 2017, when Pakistan beat India in the final by 180 runs in London.
Jail superintendents and senior officials were also watching the match along with prisoners in jails across Punjab.
“Under the Prison Reforms Policy, small and big industrial units and libraries have also been established in jails across Punjab to promote education and training,” the home department added.