The International Monetary Fund (IMF) has turned down Pakistan’s proposal to impose a wealth tax and a 5% duty on one-day-old chicks. These suggestions, made by the Federal Board of Revenue (FBR), aimed to raise quick revenue but lacked broad economic logic. The IMF stressed that taxation should focus on income rather than targeting specific industries or essential goods. It also questioned the FBR’s approach, calling such ideas signs of poor planning.
However, the IMF approved a Rs10 billion digital services tax, offering a boost to revenue from the fast-growing online economy. Pakistan also gained IMF approval for reducing income tax rates for middle-income groups earning below Rs500,000 per month. Although the income tax threshold won’t rise to Rs1.2 million, the tax rate for the lowest slab will drop from 5% to 1%, offering some relief to struggling households.
On the other hand, the IMF rejected tax breaks for cinema and venture capital companies. It also supported raising taxes on dividends and interest income from 15% to 20%. Meanwhile, the top income tax slab and the 10% surcharge on high earners will likely remain unchanged. These moves signal a shift toward taxing wealthier individuals and financial gains more heavily.
The IMF also questioned the excise duty on chicks, arguing it unfairly targets one sector without broader impact. The FBR failed to conduct proper research and based the proposal on a single tax case, revealing poor policy depth. Similarly, excise duties on processed foods and potential hikes on fertilisers and pesticides are under review. While the prime minister opposed the fertiliser duty, the IMF insists on fulfilling prior tax commitments.
The upcoming budget reflects intense IMF oversight, with total revenues set at Rs17.1 trillion and expenditures at Rs25 trillion for 2025–26. Despite disagreements over some proposals, the IMF has cleared major budget outlines. Finance Minister Muhammad Aurangzeb will present the budget on June 10, following the Economic Survey on June 9, as Pakistan navigates its complex fiscal future under IMF guidance.