The International Monetary Fund (IMF) recently proposed that Pakistan raise its general sales tax (GST) to 18 percent, suggesting this during extensive talks held over four rounds between the IMF delegation and Pakistani officials regarding a potential new loan arrangement.
Expressing concerns about Pakistan’s current sales tax collection system, the IMF mission noted that the central government manages sales tax collection on commodities. To address this, they recommended transferring the responsibility of sales tax collection solely to the federal government.
Furthermore, the IMF proposed abolishing GST exemptions and increasing the tax rate to 18 percent on both commodities and services.
During the fourth round of discussions, the IMF delegation urged reforms in the insurance sector, advocating for the establishment of a separate regulatory body. They also recommended privatizing three government-owned insurance companies as part of these reforms.
This proposal comes at a time when Pakistan has shown interest in securing another program with the IMF to address financial constraints. The ongoing discussions highlight the continuous dialogue between Pakistan and the IMF as they work to tackle economic challenges and find effective solutions to enhance the country’s financial stability.