No plans to ask Pakistan to raise taxes on salaries, IMF clarifies

ISLAMABAD: The International Monetary Fund (IMF) resident representative in Pakistan has denied media reports suggesting that the lending body intends to urge Pakistan to increase taxes on salaries and business income.

Media reports had been circulating stating that the IMF asked Pakistan to cut the number of tax slabs for the salaried and business class from the existing seven to four, increasing tax incidence on the middle and upper-middle income group. There have also been reports of an increase in the maximum petroleum development levy.

“There are no plans at this time,” Esther Perez Ruiz, IMF’s resident representative in Pakistan, told Reuters.

The South Asian nation is operating under a caretaker government after an IMF loan programme, approved in July, helped avert a sovereign debt default.

Under the $3 billion standby arrangement (SBA), Pakistan received $1.2 billion from the IMF as the first tranche in July.

Under the bailout deal, the IMF also got Pakistan to raise $1.34 billion in new taxation to meet fiscal adjustments. The measures fuelled all time high inflation of 38% year-on-year in May, the highest in Asia, which still is hovering above 30%.

Earlier, the Pakistani government has given assurance to the International Monetary Fund (IMF) on maintaining the power sector’s circular debt at Rs2.31 trillion.

Read: Power division recovers Rs55 billion from pilfers

The Power Division presented the details before the Senate Standing Committee for Power today. The caretaker federal government assured the IMF to maintain the circular debt of the power sector.

The session of the Senate Standing Committee for Power was held under the chair of Senator Azam Nazeer Tarar today.

In a briefing, the Power Division officials said that the circular debt stood at Rs2.31 trillion by June 2023 which will be maintained.