Sindh, Punjab told to boost property and agriculture taxes

The federal government has asked provincial governments to significantly step up their revenue efforts in the upcoming fiscal year. The target is an additional Rs400 billion in collections.

The direction was given during a virtual meeting chaired by Finance Minister Muhammad Aurangzeb with provincial finance ministers. The IMF review mission currently in Islamabad was also discussed.

Officials said the IMF has expressed satisfaction over Pakistan’s fiscal performance this year. However, it has stressed the need for stronger and more sustained revenue generation from both federal and provincial levels.

The provinces have been asked to improve collections in key areas. These include agricultural income tax, property tax, and services GST.

Sindh has been directed to strengthen property tax collection. Punjab has been urged to improve agricultural income tax performance. Officials said both areas are currently below their potential.

The federal government has asked provinces to increase their revenue contribution by nearly 40 percent compared to the current year.

The IMF mission led by Iva Petrova is currently finalising fiscal targets for the next budget. Both the federal government and provinces are expected to contribute equally to new revenue measures.

Each side is expected to introduce around Rs430 billion in additional fiscal adjustments.

The aim is to improve Pakistan’s tax-to-GDP ratio. The plan also focuses on long-term fiscal stability under the IMF programme.

Provinces are expected to generate Rs1.95 trillion in revenue next year. This compares with Rs1.26 trillion in the current fiscal year.

They are also expected to provide a cash surplus equal to 1.4 percent of GDP. This will amount to nearly Rs2 trillion transferred to the federal government.

Provincial development spending is projected at Rs2.5 trillion. This is higher than Rs2.1 trillion in the current year.

Officials said provinces have already shown strong performance in the current fiscal year. During the first nine months, they produced a combined surplus of Rs1.636 trillion.

This is higher than the full-year target of Rs1.464 trillion.

Punjab led with Rs824 billion surplus. Sindh followed with Rs441 billion. Khyber Pakhtunkhwa recorded Rs253 billion. Balochistan posted Rs118 billion.

Officials said this was mainly due to controlled spending and better financial discipline.

The Federal Board of Revenue has been assigned a target of Rs15.264 trillion for the next fiscal year. This is nearly 14 percent higher than the current target.

The half-year target up to December 2026 has been set at Rs7.022 trillion.

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