IMF supports carbon surcharge, it is good source of revenue, says Ross

[Naveed Yaseen]

AHMED MALIK
KARACHI (July 08 2009): The International Monetary Fund (IMF) fully supports the carbon surcharge on petroleum products. In answer to a Business Recorder question with regard to imposition of carbon surcharge on POL products in 2009-10 budget, the Resident Representative of IMF in Pakistan, Ross Paul, said that the carbon surcharge will be a reliable revenue source for the budget and will support needed expenditure increases notably on social and development spending as well as support for internally displaced persons.

"The taxing petroleum products is very common internationally and most countries, both oil importers and oil exporters, tax petroleum products to generate revenue for their budgets," he said. According to him, the rates of the surcharge are not high in comparison with both other emerging market countries and advanced economies. Regarding earmarking tax revenue, he said the IMF generally does not support such earmarking.

It may be recalled that Paul Ross had clarified last month that the imposition of fixed carbon surcharge on petroleum products was the choice of the Pakistani government to generate revenue. "The IMF did not impose it as a condition under the standby arrangement," he told a select group of journalists at a seminar organised by NUST Business School on global financial crisis and the role of IMF.

He also said that the IMF would pursue Pakistan's tax authorities to move toward the Value Added Tax (VAT) mode from the fiscal year 2010-11. He said that the IMF programme was focusing upon bringing reforms on the taxation side where they would move towards the VAT mode.

He was of the view that there was a dire need to spend money on the social sector, especially health and education, but it required revenue generation as only one percent population was paying their due taxes. "The tax to the GDP ratio is standing at the lowest nine percent and there is a need to broaden the tax base," according to him.

http://www.brecorder.com/index.php?id=933580