The International Monetary Fund (IMF) has asked Pakistan to impose income taxes worth around Rs225 billion, while questioning the sustainability of the revenue performance due to a shift in policy to curb imports, reports Tribune.
The IMF plan seeks to reduce the number of income tax slabs and withdraw income tax exemptions currently given under the second schedule of the Income Tax Ordinance that also include pensioners, according the government sources.
The Fund has also asked for withdrawal of sales tax exemptions to those whose revenue impact is in addition to Rs225 billion, the sources said, adding that the final decision to accept or reject the demands would be taken during the policy level talks with the IMF set to begin in Washington on October 13.
During four days of the technical talks, the IMF has pressed Pakistan hard to increase the electricity prices on account of annual and quarterly adjustments in tariffs, as it termed the measures to contain circular debt insufficient, the government sources told The Express Tribune.
The demand for increasing taxes was surprising, particularly after the FBR exceeded its first quarter tax collection target by a margin of Rs187 billion, which has positioned it to achieve the annual target of Rs5.829 trillion.
The sources said that the IMF has asked Pakistan to increase the personal income tax rates for the salaried and individuals by scaling down the numbers of tax slabs and also urged the authorities to withdraw the sales tax exemptions. Majority of the salaried individuals were paying taxes, which according to the IMF were below their income levels, the sources said.
