Update: In a statement to Reuters, the International Monetary Fund (IMF) resident representative in Pakistan has denied reports that it is planning to ask Pakistan to increase taxes on the salaried class and businessmen.
The International Monetary Fund (IMF) wants Pakistan to reduce the number of tax slabs for salaried and business-class workers from 7 to 4 and more than double tax collection from business individuals and salaried individuals.
The proposal was made by the lender’s technical mission that finished its two-week study of Pakistan’s tax policies last week. The mission also proposed raising the sales tax rates to 18 percent, reported Express Tribune.
The IMF visiting team shared its findings with the federal government before departing, while its draft report will be released soon.
Tax officials appear hesitant to embrace the IMF’s advice since the salaried class is already heavily taxed.
The IMF suggested reducing the number of tax brackets from seven to four. Currently, the salaried class income tax rates range from 2.5 percent to 35 percent, depending on the annual income. If the slabs are lowered to four, the tax burden will grow drastically for the low-middle income groups.
People earning Rs. 200,000-300,000 per month are currently paying the highest tax. If two to three tax slabs are eliminated, the tax rates for persons earning Rs. 200,000-300,000 will skyrocket. Notably, unsalaried individuals and retailers make up a sizable tax base that is not subject to income tax.
The IMF also proposed that Pakistan discontinue the favorable sales tax rates imposed under the 8th Schedule of the Sales Tax Act, a move that would restore sales tax on hundreds of items to the regular 18 percent.
Bhai VAT introduce kardo
Hum salaried class ki toh G phardi hai
I know one person in my circle who is running business and have multiple offices paid 24K in taxes where as i who earned 135K monthly paid 70K
VAT hoga sb se tax milega
ya phir wohi baat hai Pakistan se Zinda Bhaag
Sad affair of state
report him
I reported un-taxed mobiles at different markets on citizen portal. FBR guys started asking me stupid questions like naming exact shops and recipts. They are protecting these non-taxpayers. We need a strong poeple based government and to get rid of this elite capture
I hope they reduce taxes
why not reduce expewnses even usa does not have this type of big army
I at times feel that IMF has no clue as to what they are suggesting. While there have been reform and structural challenges around taxation in the past, but just milking the cow is not the optimal solution. The need of the hour is to include retail sector in the tax net – introducing a fixed taxation for this sector at the start will greatly help.