Govt withdraws key FBR powers on IMF demand

ISLAMABAD:

The federal government has withdrawn key powers from the Federal Board of Revenue (FBR) in line with a demand of the International Monetary Fund (IMF).

The Ministry of Finance has established a Tax Policy Office, separating tax policy formulation from tax collection. The FBR will now be limited to tax collection only and policy-making will fall under the Ministry of Finance.

The Tax Policy Office will report directly to the Minister of Finance and Revenue while the FBR will focus on implementing tax proposals to increase revenue. The Tax Policy Office will analyze the government’s reform agenda and tax proposals.

The government had assured the IMF of maintaining autonomy in tax policy and collection. Income tax, sales tax, and federal excise duty (FED) policies will now report to the Minister of Finance. New measures will be introduced to curb tax fraud and address loopholes.

Meanwhile, the Planning Commission has also issued a new scorecard for approving development projects in line with a diktat from the IMF.

The scorecard will further limit the Public Sector Development Programme (PSDP) for the next fiscal year. The Planning Commission has released the scorecard based on Public Investment Procedures and Parameters. Under the scorecard, priority projects will be included in the PSDP.

In the next fiscal year, only 10% new development projects will be allowed and funding for provincial projects under the PSDP will be restricted. However, the federal government will continue to finance certain regional projects.