ISLAMABAD, May 17 The International Monetary Fund (IMF) has expressed concerns over the government’s proposal to reduce tax rates for salaried individuals, sources said as virtual negotiations between Pakistan finance ministry officials and the Fund are underway.
Sources reported that the IMF cautioned that lowering taxes for this group could further widen the existing tax gap as the government suggested a tax cut for the salaried class.
The IMF has also stressed the importance of enhancing tax collection efforts, urging the government to generate an additional Rs70 billion through effective enforcement measures.
Furthermore, sources stated that Federal Board of Revenue (FBR) is unlikely to collect more than Rs13,200 billion in taxes this fiscal year, prompting ongoing discussions on the country’s tax policy.
Finance Ministry officials have clarified that the proposed reduction in taxes for salaried individuals has not been finalized, and further talks on the matter will continue.
However, in April, the IMF recommended increasing motor spirit and high-speed diesel prices by Rs47 per litre on the standard rate of 18%.
Similarly, the government was allowed by the IMF to reduce the withholding tax on property purchases by 2% starting from April.
Also, in March, the IMF delegation assured Finance Minister Muhammad Aurangzeb of their commitment to economic support for Pakistan. They stressed the need for immediate cost-cutting and has asked Pakistan to present a comprehensive plan to bridge the revenue shortfall in the next quarter