The International Monetary Fund has raised concerns over Pakistan’s ability to meet future revenue targets if the government proceeds with plans to abolish the Super Tax and reduce tax rates for salaried individuals in the upcoming budget.
During virtual talks with Pakistani authorities, the IMF mission questioned how the government would sustain revenue growth in fiscal year 2026–27 if the measures are implemented, reported a nationa daily.
Officials said the Federal Board of Revenue may still collect around Rs. 13.4 trillion to Rs. 13.5 trillion by June 2026 through enforcement measures, litigation settlements, and outstanding installments of the Super Tax.
However, the IMF argued that such steps largely represent one-off gains and may not provide a sustainable path to meet next year’s tax target.
Pakistani officials told the lender that the measures should not be viewed as temporary. They said resolving long-pending tax disputes in courts could generate billions of rupees in additional revenue in the coming fiscal year.
The IMF mission is expected to resume formal budget negotiations with Islamabad in May 2026, when key fiscal assumptions and revenue targets for the next financial year will be finalized, officials said.
Earlier discussions at the Prime Minister’s Office of Pakistan resulted in a proposal to request IMF approval for scrapping the Super Tax and cutting income tax rates for the salaried class by about 5 percentage points in the next budget.
But the proposal faced resistance during recent talks, with IMF officials questioning how the government would replace an estimated Rs150 billion in revenue from the levy.
Officials said it remains premature to assume the IMF will agree to abolishing the tax entirely without credible alternative revenue measures.
As part of broader fiscal reforms, the government has established a new Tax Policy Office within the finance ministry to prepare proposals for the next budget.
Further discussions are expected after the IMF and the World Bank Group conclude their Spring Meetings in Washington from April 13–18.
Officials said the new tax proposals are likely to include adjustments to income tax slabs for higher earners, a move that could cost the government Rs. 15 billion to Rs. 20 billion in revenue. The FBR would need to propose alternative tax measures to offset the shortfall before securing IMF approval.