IMF asks Pakistan to increase GST to 18pc.
In a bid to address Pakistan’s economic challenges, the International Monetary Fund (IMF) has proposed a series of fiscal reforms and privatization measures during its ongoing discussions with Pakistani authorities.
These recommendations aim to bolster revenue generation, streamline tax administration, and enhance efficiency within key sectors of the economy.
Proposed GST Increase to 18%:
One of the focal points of the IMF’s recommendations is the adjustment of the general sales tax (GST) rate to 18%.
This proposed increase, as disclosed by reliable sources to ARY News, signifies the IMF’s strategy to augment government revenue streams.
However, such a measure could potentially impact consumers by elevating the cost of goods and services across the board.
Centralization of Sales Tax Collection:
Furthermore, the IMF has advocated for the centralization of sales tax collection, suggesting that the federal government assume sole responsibility for this task.
ایک طرف حکمران اشرافیہ کی اربوں ڈالر کی جائیدادیں دبئی میں دوسری طرف اقوام متحدہ بتا رہی ہے کہ پاکستان میں کروڑوں بچے غربت کی وجہ سے سکولوں سے باہر ہیں۔ 11 ارب ڈالر کے اثاثے پراپرٹی لیکس میں سامنے آئے ہیں، دوسری طرف ہم چند ارب ڈالر کے لیے IMFکے آگے پاپڑ بیل رہے ہیں۔ #سوالنامہ pic.twitter.com/Pe3FUT7LMN
— Ather Kazmi (@2Kazmi) May 15, 2024
By consolidating tax collection processes under federal jurisdiction, the IMF aims to enhance efficiency and effectiveness in revenue collection efforts.
End of GST Exemptions:
In line with its broader agenda to broaden the tax base, the IMF has recommended the elimination of GST exemptions.
This proposal entails subjecting all goods and services to the 18% GST rate, thereby diversifying revenue sources and bolstering government coffers.
Reforms in the Insurance Sector:
Recognizing the importance of regulatory oversight in fostering a robust insurance industry, the IMF has called for comprehensive reforms in Pakistan’s insurance sector.
Central to this initiative is the establishment of a separate regulatory body, aimed at enhancing governance and ensuring stability within the sector.
Privatization of Government-Owned Insurance Companies:
Additionally, the IMF has urged Pakistani authorities to embark on the privatization of three state-owned insurance companies.
This measure seeks to inject competition and efficiency into the insurance sector, potentially leading to improved services and market dynamics.
However, concerns regarding potential job losses and accessibility to insurance services may arise as a consequence of privatization.
As IMF asks Pakistan to increase GST to 18pc, Prime Minister Shehbaz Sharif’s recent announcement to privatize all non-strategic state-owned enterprises aligns closely with the IMF’s recommendations.
By divesting government ownership in these entities, Pakistan aims to stimulate economic growth, attract investment, and mitigate financial burdens on the state.
