As we are living in the IMF era, in Pakistan, where not just millions but tens of millions of children are unable to attend school due to a lack of resources, many others cannot afford books, notebooks, or pencils. Consequently, they start working at shops or workshops at a very young age.
In this already stressful situation, another piece of bad news is that the IMF has asked the Pakistani government to impose taxes on children’s school books, notebooks, and other stationery items.
Sources indicate that FBR authorities will brief the prime minister tomorrow on the FY2024-25 budget. The proposals include a phased elimination of sales and income tax exemptions. The government is considering imposing a sales tax on tractors and pesticides, which could raise their prices. Currently, these items are exempt under the Sixth Schedule of the Sales Tax Act.
On Monday, the IMF started discussions with Pakistan, confirming that Islamabad has requested a new loan program. The IMF delegation, led by Mission Chief Nathan Porter, visited from May 13 to May 23 to discuss economic improvements. The statement emphasized Pakistan’s efforts to increase revenue and the need for fair tax collection from privileged sectors.
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The IMF assured its commitment to Pakistan’s sustainable economic growth, supported by the Extended Fund Facility (EFF) program. Pakistan has met targets under the Standby Arrangement Agreement, aiding the new loan program. The IMF also called for expanding the tax net, implementing policy and exchange rate measures to control inflation, and reforming the energy sector.
Furthermore, the IMF stressed the importance of reducing energy production costs and maintaining a stringent monetary policy until inflation is under control. Improving the performance of state-owned enterprises and privatizing them for better efficiency were also highlighted as essential steps.