IMF asks Pakistan to 'impose' tax on monthly pensions

ISLAMABAD: In another ‘demand’, the International Monetary Fund (IMF) mission asked Pakistani authorities to impose tax on monthly pensions exceeding Rs 100,000, ARY News reported on Sunday, citing sources.

Sources close to the development revealed that the ‘new bailout programme’ will necessitate pension reforms, with policy talks scheduled to commence tomorrow as negotiations between Pakistan and IMF have reached their final phase.

One of the key components of the new loan program is the imposition of a tax on monthly pensions above Rs 100,000 as ‘insisted’ by the IMF.

The move is expected to get the necessary legislative support aimed at taxing wealthy pensioners.

As negotiations progress, it becomes evident that the ‘new bailout programme’ will mandate stringent economic measures.

Pakistan remains committed to the IMF loan program, with no plans for its replacement.

In order to qualify for the ‘new bailout programme’, Pakistan will need to exercise fiscal discipline, curbing spending and deficits as per IMF stipulations, sources added.

Last week, the IMF mission has ‘asked’ Pakistani authorities to increase general sales tax (GST) to 18 percent.

The demand was put forward by the IMF during four round of talks with Pakistan authorities for a fresh loan.

IMF mission observed that the Pakistan’s sales tax collection system is facing problems as the centre is collecting sales tax on the commodieis, while the provinces on the services.

They suggested sales tax collection should only be done by the federal government. The international lender also demanded to end GST exemption and increase it to 18 per cent on the commodities and service, the sources said.

During the fourth round of talks, the IMF mission also demanded of Pakistan for reforms in the Insurance Sector and formation of a separate regulatory body. The fund also demanded privatisation of three government-owned insurance companies.

The International Monetary Fund (IMF) delegation is currently in Pakistan as Islamabad is interested in taking another programme from the international lender to address the finance shortage.