Pakistan has informed the International Monetary Fund (IMF) that it is ready to impose additional tax measures worth Rs. 200 billion in January if revenue collection falls short or expenditures exceed the agreed limits during the first half of the fiscal year.
Officials said the proposed contingency measures include increasing income tax rates on landline and mobile phone usage and on cash withdrawals from banks. These steps will only be activated if the July to December fiscal performance deviates from the targets set under the IMF programme.
Other options under review include raising the sales tax on solar panels and extending the federal excise duty (FED) to items such as confectionery and biscuits.
According to tax authorities, the government must choose between raising the standard sales tax rate to 19 percent, which could generate around Rs. 225 billion annually, or adopting a combination of changes in withholding tax, sales tax and FED.
The proposals indicate that the burden of additional taxes may once again fall on existing taxpayers, while efforts to broaden the tax base continue to show limited progress.
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This development follows recent decisions by the Sindh and Punjab governments to delay the implementation of higher agricultural income tax rates of up to 45 percent for one year.
Officials said Pakistan has conveyed to the IMF that it will implement the additional revenue measures if the Federal Board of Revenue (FBR) misses its end-December targets or if expenditure surpasses the agreed ceiling.
This commitment has helped clear the path for a staff-level agreement on the second review of the $7 billion IMF programme.
Via Express Tribune
