Revenue gaps.

THAT the government is likely to soon take significant measures to fill the gap in its revenues due to shrinking imports during the first four months of the current fiscal year was expected. A report suggests that the finance ministry is considering different options shared by the tax authorities to bridge the shortfall in customs duty and sales tax at the import stage. Last year, the share of import taxes was around 52pc, which has come down to 45pc over the first four months of the present financial year. The revenue hole is projected to grow to Rs100bn because of the compression of imports to reduce the trade deficit and manage the current account gap if new measures are not taken. The increase in import taxes is also crucial to achieve the tax-to-GDP target of 9.5pc for the current fiscal year, hold down the overall fiscal deficit and produce primary surplus as required under the deal with the IMF. Some reports indicate that the IMF has already asked the authorities to implement measures to raise an additional Rs600bn in taxes.

The government is also planning to charge 17pc sales tax on petroleum products as agreed with the IMF. Unlike previously, the IMF is now exerting massive pressure on Islamabad to meet the programme targets despite the flood devastation...