ISLAMABAD: The IMF’s resident representative in Pakistan dismissed media claims suggesting plans for tax hikes on salaries and business income, as well as an increase in the petroleum levy threshold.
Reports had circulated indicating the IMF’s supposed request to reduce tax slabs for salaried and business classes from seven to four, potentially impacting middle to upper-middle income brackets. These reports also hinted at a rise in the maximum petroleum development levy.
An IMF official clarified that there are currently no such plans in motion.
Pakistan, operating under a caretaker government post an IMF-approved loan in July, received $1.2 billion as the initial tranche of the $3 billion Stand-by Arrangement.
The country faced a severe balance of payment crisis, with foreign exchange reserves lasting only three weeks of controlled imports. This was coupled with exceptionally high inflation and currency devaluation.
As part of the bailout agreement, the IMF required Pakistan to generate $1.34 billion in new taxes for fiscal adjustments.
These measures contributed to a record-high inflation of 38% year-on-year in May, persisting at over 30%, marking the highest in Asia.
