The IMF proposed to Pakistan an increase to 18% in sales tax on fuel, medicines, unprocessed foods, stationery and other goods to meet tax collection targets for the current fiscal year, the portal reported. Pro Pakistani on March 4.
IMF experts noted that Pakistan is short of taxes by 1.3 trillion rupees (about 450 billion rubles), but they did not assess the consequences of the tax increase on inflation in Pakistan. The fund proposes that the government introduce a flat 18% sales tax on all goods, except for certain “vital” categories (for which the sales tax can only be 10%).
Recall that throughout 2023, consumer inflation in Pakistan, caused by rapid increases in fuel, gas and electricity prices, at times exceeded 40%. Even headline inflation in January this year officially amounted to more than 28%.
Naturally, a sharp increase in sales taxes will cause sellers to continue raising prices, balancing their income.
At the same time, the new Government, which will soon be formed by Prime Minister Shehbaz Sharif, recently elected for the second time, will find itself in a very difficult situation: the second largest in the ruling coalition, the Pakistan People’s Party (PPP), still does not agree to join the government, sharing with the ruling Pakistan Muslim League-Nawaz (PML-N) responsibility for the management decisions taken.
As a result, the PML-N faces a sad choice: either take on all economic measures and disasters, following the example of the IMF, or quickly face a shortage of foreign exchange reserves. The latter could not reach the double-digit figure (more than 10 billion dollars (915 billion rubles)), despite all the efforts of the government.
Source: Rossa Primavera
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