IMF asks Pakistan to ‘impose’ tax on monthly pensions.
The International Monetary Fund (IMF) has set stringent conditions for Pakistan to secure a new bailout package, key among these demands is the introduction of a tax on monthly pensions exceeding Rs 100,000.
This requirement is part of a broader set of pension reforms to be discussed in policy talks starting soon, with negotiations between Pakistan and the IMF nearing their final phase.
The proposed pension tax aims to target wealthier pensioners and is expected to receive legislative approval.
This measure highlights the comprehensive economic adjustments Pakistan must implement to qualify for the new bailout program, which emphasizes fiscal discipline, reduced government spending, and lower deficits.
Additionally, the IMF has recommended raising the general sales tax (GST) to 18 percent.
The international lender has pointed out issues in Pakistan’s sales tax collection system, where the federal government collects taxes on commodities and provincial governments on services.
The IMF suggests centralizing sales tax collection under the federal government and removing GST exemptions to improve revenue collection.
In the insurance sector, the IMF has called for significant reforms, including the creation of a separate regulatory body and the privatization of three state-owned insurance companies.
These demands are part of the IMF’s broader strategy to reform Pakistan’s economic structure and enhance financial stability.
The IMF delegation is currently in Pakistan as the country seeks another loan program to address its financial shortfalls.
Compliance with these stringent measures is crucial for Pakistan to secure the necessary funding from the IMF.
Also read: Pakistan ‘fails’ to satisfy IMF on real estate taxation reforms
