Islamabad, Nov 14: IMF to Meet Provinces Today Over Delay in 45% Agricultural Income Tax Implementation
The International Monetary Fund (IMF) mission will meet with representatives from provincial governments today to assess the progress on implementing a 45 percent tax on agricultural income.
This tax is a crucial condition tied to the IMF’s $7 billion loan program.
However, none of the four provinces—Punjab, Khyber Pakhtunkhwa (KPK), Sindh, and Balochistan—managed to meet the October 31 deadline for enacting the tax.
While Punjab’s cabinet has approved the bill, Khyber Pakhtunkhwa has only drafted it, and Sindh and Balochistan have made no progress.
According to the National Fiscal Pact, which was signed by all provinces, the agricultural income tax is scheduled to be implemented starting January 1, 2025.
During the meeting, the IMF mission will be briefed on the delays in passing the legislation, as well as the role each province plays in broader economic and tax reforms.
These reforms include taking on additional responsibilities previously held by the federal government, such as overseeing higher education, healthcare, and infrastructure development.
In addition to this, the IMF mission will review the performance of provincial budgets. Provinces were expected to maintain a collective budget surplus of Rs. 342 billion in the first quarter.
However, a shortfall occurred due to Punjab’s deficit of Rs. 160 billion.
Despite this, the overall surplus for the period from July to September increased to Rs. 182 billion.
The IMF’s meeting with provincial officials is a significant step in ensuring that the necessary reforms are implemented and that provincial budgets align with expectations.
The delays in tax implementation and budget performance may have serious implications for the country’s fiscal stability and its commitments to the IMF loan agreement.
