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IMF Asks Pakistan to ‘Impose’ Tax on Monthly Pensions

The International Monetary Fund (IMF) mission has reportedly urged Pakistani authorities to implement a tax on monthly pensions exceeding Rs 100,000, as per ARY News sources. Additionally, the IMF is pressing for pension reforms as part of the “new bailout program,” with policy discussions set to commence soon as negotiations between Pakistan and the IMF […]

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IMF Asks Pakistan to ‘Impose’ Tax on Monthly Pensions

The International Monetary Fund (IMF) mission has reportedly urged Pakistani authorities to implement a tax on monthly pensions exceeding Rs 100,000, as per ARY News sources. Additionally, the IMF is pressing for pension reforms as part of the “new bailout program,” with policy discussions set to commence soon as negotiations between Pakistan and the IMF approach their final stages.

The IMF has emphasised that a tax on monthly pensions above Rs 100,000 is one of the main components of the proposed loan programme. According to ARY News, it is expected that this legislative demand—which aims to tax wealthy pensioners—will be granted.

As discussions between Pakistan and the IMF continue, it is clear that the new rescue plan would include strict economic measures. Pakistan isn’t planning to look for another loan programme; it’s still committed to the IMF loan programme.

To qualify for the “new bailout program,” Pakistan will need to exercise fiscal discipline by reducing spending and deficits in accordance with IMF guidelines, as per sources.

Recently, the IMF mission proposed an increase in the general sales tax (GST) to 18 percent, as reported by ARY News. This demand was raised during multiple rounds of discussions between Pakistani authorities and the IMF for a fresh loan.

Sales tax collection in Pakistan is currently handled by both the national and provincial governments. The IMF mission outlined problems with this system and recommended that the federal government take complete responsibility for it. In addition, the IMF suggested hiking the tax to 18 percent on goods and services and terminating the GST exemptions.

The creation of a distinct regulatory agency and changes to the insurance industry were additional demands made by the IMF during the fourth round of negotiations. The fund also suggested three state-owned insurance companies be privatised.

Presently, an IMF delegation is in Pakistan, as the country seeks another program from the global lender to address its financial crisis.

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