Pakistan has drafted a detailed plan to implement new taxes and reduce public spending to achieve its revenue goals for the current fiscal year, an IMF-linked report revealed on Thursday. Officials indicated that the government is prepared to introduce additional tax measures and cut expenditures to bridge a potential shortfall and meet the Federal Board of Revenue’s (FBR) collection target by December 2025. The report highlights concerns over a possible decline in FBR tax revenue, prompting the government to consider the following proposed measures: 1) A 5% increase in excise duty on fertilizers and pesticides 2) A new tax on high-value sugar-based items 3) The imposition of an 18% sales tax on several specified goods These steps are part of what officials describe as a contingency strategy designed to avoid the need for a disruptive mini-budget later in the fiscal year. Alongside new revenue measures, Pakistan also plans to curtail expenditure to counterbalance lower-than-expected revenues. The overall effort is aligned with the country’s longer-term commitment to push the tax-to-GDP ratio to 15%, a key structural objective frequently highlighted in IMF engagements. Economists warn that while the proposed measures may help stabilise revenues in the short term, they could also fuel inflation if not calibrated carefully. The developments come as Islamabad continues its discussions with the IMF, with policymakers emphasising the need to maintain fiscal discipline while protecting vulnerable segments of the population.
Government unveils plan for new taxes and spending cuts
