Islamabad, Pakistan – Web Desk: The International Monetary Fund (IMF) has urged Pakistan to impose an 18% General Sales Tax (GST) on petroleum products and solar systems as part of a broader set of fiscal measures aimed at boosting revenue collection.
The proposal comes as Pakistan faces a widening tax shortfall, with the Federal Board of Revenue (FBR) expected to miss its annual target by more than Rs600 billion. Officials say the IMF has presented a fresh list of demands ahead of the upcoming federal budget, including a significant increase in next year’s tax target to over Rs15.6 trillion.
Currently, petroleum products are exempt from GST, but the IMF has recommended applying the standard 18% rate to fuel, a move that could further raise fuel prices and increase inflationary pressure. The lender has also called for the imposition of the same tax rate on solar panel systems, potentially impacting consumers shifting to renewable energy amid rising electricity costs.
In addition, the IMF has proposed ending tax exemptions for new housing projects and introducing asset-based taxation for small businesses and traders.
Despite a downward revision of the current fiscal year’s tax target from Rs14.13 trillion to Rs13.98 trillion, authorities report a shortfall of Rs428 billion within the first eight months. By March, tax collection stood at over Rs865 billion against a target of Rs1.367 trillion.
Officials attribute the revenue gap to reduced imports due to ongoing regional tensions, high global oil prices, and declining business activity. However, the FBR remains hopeful that additional revenue from super taxes and surcharges may help narrow the deficit.
Finance Ministry officials have indicated that further negotiations with the IMF will take place before the finalization of the upcoming budget.
