The International Monetary Fund has reportedly suggested raising the standard General Sales Tax (GST) rate from the existing 18% to 19%.
According to media reports, Pakistani authorities have opposed the suggestion, arguing that an increase in GST would intensify inflationary pressures and further strain household budgets.
Officials estimate that even a one-percentage-point rise in GST could generate an additional Rs250–300 billion in revenue. The proposal reportedly comes amid concerns raised by the IMF over Pakistan’s difficulties in meeting revised tax collection targets for the current fiscal year.
Although the FBR is projected to collect nearly Rs13 trillion by the end of the fiscal year, officials say achieving the official target still appears uncertain. In this context, the IMF is pressing for stronger revenue measures, including the proposed GST adjustment.
Reports further indicate that the IMF expects average inflation to hover around 8.4% in the next fiscal year and believes that higher taxation could help stabilise public finances amid ongoing fiscal pressure.
Officials also say the IMF has recommended phasing out concessional tax treatment for hybrid vehicles by raising GST from 8.5% to the standard 18% once the current policy ends in 2026. Discussions regarding the taxation framework for electric vehicles are still underway.
FBR misses tax collection target by Rs868 billion in 11 months
