Chicken to go more expensive as govt okays Rs36b more taxes to meet IMF demands

In a bid to plug the revenue gap caused by higher-than-anticipated salary increases and tax relief on solar panels, the federal government has approved new tax measures worth Rs36 billion, as part of its commitment to the International Monetary Fund (IMF).

The decision, ratified by the Standing Committee on Finance of the National Assembly, follows a widening fiscal gap after the government raised salaries by 10%, instead of the originally proposed 6%, and slashed the proposed 18% tax on solar panel imports down to 10%.

Chairman of the Federal Board of Revenue (FBR) revealed that these relief decisions created a shortfall in revenue targets agreed with the IMF. "The IMF demanded an alternative plan, and in response, six proposals were submitted, out of which three were accepted," he stated.

To bridge the deficit, the government has proposed the following new taxation measures: Rs10 federal excise duty on day-old chicks, sparking concern within the poultry sector; 29% tax on profits made through mutual funds by corporate entities; and, 20% tax on payments from government securities.

The IMF, according to the FBR, has approved these three measures as a suitable alternative to maintain fiscal discipline under the ongoing program.

However, the FBR cautioned that failure to implement the agreed steps could force the government to revert to the original plan of imposing an 18% tax on solar panel imports, potentially affecting the country’s growing shift toward renewable energy.