IMF wants Pakistan to impose tax on stationery items

ISLAMABAD: The International Monetary Fund (IMF) has recommended the Pakistani government impose a tax on stationery items including books, pens, etc, citing sources ARY News reported on Wednesday.

Sources in the finance department told ARY News that the lender has asked the government end tax exemptions on books, pen, paper, sticky note paper, card board and other stationery items.

Sources say that the FBR authorities will brief the prime minister tomorrow on the FY budget 2024-24.

According to budget proposals for the FY2024-25, Pakistan is likely to end exemption on sales and income tax, phase-wise.

The government is also considering imposing a sales tax on tractors and pesticides, potentially leading to price hikes for these essential agricultural products.

Currently, under the Sixth Schedule of the Sales Tax Act, pesticides and their active ingredients registered by the Department of Plant Protection are exempt from sales tax.

Earlier on Monday, IMF released an official statement following discussions with Pakistan. The statement confirmed that Islamabad has formally requested a new loan program from the IMF.

The IMF delegation, led by Mission Chief Nathan Porter, visited Pakistan and held extensive negotiations from May 13 to May 23 to discuss the country’s economic improvements.

The statement highlights that the Pakistani government is making serious efforts to increase revenue and emphasizes the need for fair tax collection from privileged sectors.

The International Monetary Fund (IMF) mission assured Pakistan of its commitment to working together for sustainable economic growth. The statement noted that Pakistan’s economy would stabilize with the support of the Extended Fund Facility (EFF) program.

Pakistan has successfully met the targets set under the Standby Arrangement Agreement, which will support the forthcoming new loan program.

The statement underscores the necessity of expanding the tax net to ensure economic growth and stability. The IMF calls for appropriate policy and exchange rate measures to control inflation and stresses the critical need for energy sector reforms in Pakistan.

Reducing the cost of energy production is essential, and a stringent monetary policy is required until inflation is under control, the statement said.

The IMF also highlighted the need to improve the performance of state-owned enterprises and indicated that privatization of these corporations is essential for better efficiency.