IMF proposes tax hikes on electricity and gas in Pakistan

As Pakistan braces for negotiations on a new loan package from the International Monetary Fund (IMF), the IMF has unveiled a series of proposals ahead of the scheduled arrival of its delegation on May 15th. These proposals, integral to discussions surrounding a crucial $6 to $8 billion bailout package, include suggestions to implement additional taxes, hike electricity and gas prices, impose taxes on pensioners, and privatize state-owned entities facing financial losses.

According to sources, the Federal Board of Revenue (FBR) is poised to commence deliberations on pension system reforms. The IMF’s proposal entails either taxing pensioners earning less than a hundred thousand rupees or imposing a flat 10% tax on all pensioners. The government is reportedly proactive in endorsing these measures, aligning its stance with the IMF’s recommendations.

In preparation for the impending IMF mission, efforts have been made to establish budgetary targets and secure cabinet approval for the budget strategy paper. Directives have been issued to ministries in this regard.

Moreover, the Ministry of Finance has initiated the budget formulation process, aiming to finalize targets concerning loan repayments, defense expenditure, and tax revenues, among other aspects. These targets will be shared with the IMF once they are formalized.

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