IMF demands tax on farm sector

The International Monetary Fund (IMF) has demanded increased tax collection from Pakistan’s provinces and the imposition of an agriculture tax. The IMF has pointed out that the agricultural sector, which represents a significant share of Pakistan's income, is under-taxed. This demand comes as part of broader recommendations to enhance provincial taxation through the National Tax Council, noting that provincial tax contributions currently stand at a minimal one percent of national revenues.

Additionally, the IMF has urged for comprehensive tax collection on properties and sales tax on services at the provincial level. They have also emphasized anti-corruption measures in the upcoming 2024 budget, calling for the publication of assets held by office holders, government officials, ministers, and parliamentarians. The IMF has suggested establishing a portal for public disclosure of these assets, a requirement under the agreement which Pakistan has yet to fulfill. Banks will now be required to obtain asset information from government officials when opening new accounts.

Negotiations between Pakistan and the IMF are ongoing, with significant disagreements remaining over tax exemptions for the former Federally Administered Tribal Areas (FATA) and the tax treatment of various income groups. The IMF is pushing for the immediate removal of tax breaks in former FATA regions, while Pakistan’s Finance Ministry argues for a one-year extension to support development efforts. There has been progress on revising income tax calculations for exporters, moving from a flat rate to a system based on income and expenses.

These steps are seen as crucial for Pakistan to secure further financial assistance from the IMF and to stabilize its economic situation  .