The International Monetary Fund (IMF) has urged Pakistan to introduce fresh taxes totaling Rs1.3 trillion in the upcoming budget, as part of the country’s efforts to secure a new bailout package to reinforce its economic reforms, sources informed The Express Tribune.
If accepted, this measure would elevate the annual target of the Federal Board of Revenue (FBR) to a substantial Rs12.3 trillion. The FBR has reported a significant rise in tax collection, reaching Rs5.150 trillion from July 1, 2023, to mid-February, compared to Rs3.973 trillion during the same period in the preceding fiscal year—a surge of 30 percent in levy collection during the initial seven and a half months of 2023-24.
The additional Rs1.3 trillion in taxes represents 1% of the projected size of the economy for the upcoming year.
The IMF is proposing that Pakistan retrieve half of the additional taxes from both salaried individuals and businesses, according to the report.
In its Tax Diagnostic report shared with the government, the IMF has suggested reducing the number of income tax slabs for salaried individuals to four, a move that could significantly increase the tax burden on both salaried workers and businesses if implemented.
Discussions on the IMF’s proposal for additional taxes are anticipated to occur during the forthcoming mission-level talks regarding the next bailout package. The government aims to engage in negotiations with the IMF, particularly concerning the impact on salaried workers.
