Islamabad (November 16, 2018): The International Monetary Fund (IMF) has asked Pakistan to slap new taxes worth nearly Rs. 160 billion including raising the standard general sales tax (GST) to 18%.
Putting the Pakistan Tehreek-e-Insaf (PTI) government in a difficult position as it has promised a reduction in the indirect tax burden.
The IMF mission has sought tax efforts equal to 0.4% of gross domestic product (GDP) or Rs. 160 billion as part of an overall adjustment under the program.
It has also asked the Federal Board of Revenue (FBR) to prepare a strategy for releasing tax refunds and present it to the Fund before the end of policy talks.Besides the Rs. 160 billion tax efforts, the IMF has suggested improving revenue collection at the import stage due to 26% rupee depreciation since January this year and further devaluation under the IMF program.It will be a challenge for the government to impose new taxes as well as strike a balance between direct and indirect taxes.The officials said the IMF was demanding that Pakistan also increase the income tax rates.
After coming to power, the PTI government had reduced the FBR’s annual tax collection target to Rs. 4.398 trillion. In the first four months of current year, it suffered a shortfall of Rs. 68 billion despite announcing a mini budget two months ago.
It is not clear whether the Rs.160 billion worth of additional taxes are aimed at increasing the overall target to Rs. 4.560 trillion or some of these measures will cover the shortfall.