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IMF asks Pakistan to establish national tax commission

IMF asks Pakistan to establish national tax commission

KARACHI: International Monetary Fund (IMF) has asked Pakistan to establish a national tax commission for enhancing the efforts of revenue mobilization.

In its country report on Pakistan, IMF said that the commission or a coordination committee would help coordinate aspects of tax policy and administration across provinces and layers of the government.

IMF report said that there is considerable scope to increase efficiency, flexibility, and responsiveness of the fiscal framework by the next National Finance Commission (NFC), although stakeholders’ views on these matters differ.

In this context, IMF advised that effective mechanisms for fiscal discipline and coordinating the fiscal stance, for example, a technocratic fiscal council or alternative body to develop and agree on broad fiscal rules for all levels of governments, would help improve macroeconomic management.

Flexibility of the framework could be improved by establishing a jointly funded contingency fund aimed at absorbing large and unexpected shocks to expenditure of national importance.

Macroeconomic risks from federal borrowing could be reduced by narrowing the vertical imbalance, for example, through assumption of additional expenditure responsibilities by the provinces or a burden-sharing arrangement with respect to joint areas of responsibility.

Finally, continued improvement of PFM frameworks at both provincial and local government levels will be critical to ensure adequate efficiency of public expenditure and to reduce regional disparities in the provision of quality public services.