Islamabad: The federal government has started reviewing proposals for imposing a new tax at the local level in case of making Islamabad an autonomous unit.
The talks between Pakistan and the IMF for the fifth review under the loan program will begin this month. During the talks with the IMF delegation this month, negotiations will be held on the fifth review under the Extended Fund Facility program, in which this regard will also be discussed.
Sources say that revenue will be collected to run basic facilities and administrative infrastructure within the limits of Islamabad, which can be spent within the limits of Islamabad itself. Among the proposals that have been prepared initially, taxes will be collected to spend on hospitals, schools, colleges and other educational institutions, welfare works and administrative infrastructure in Islamabad.
The tax collection proposals will be discussed with the IMF delegation during the upcoming economic review and this tax can be introduced in the budget of the next fiscal year.
Sources further said that the final estimate for tax collection is yet to be made. A new tax will be imposed to create financial capacity for Islamabad, keeping in mind the infrastructure. In this regard, tax proposals will be initially prepared by the FBR, after which proposals will be presented to the tax subcommittee established for infrastructure to make Islamabad an autonomous unit.
After approval from the relevant subcommittee, these proposals will be presented to the committee established under the chairmanship of the Minister for Planning, from where they will also be presented to Prime Minister Shehbaz Sharif after approval and then a final decision will be taken after the IMF approval.
For the economic review negotiations with the IMF, the Ministry of Finance has directed all the relevant ministries and institutions to compile the necessary data and reports to prepare for the negotiations.
Sources said that the relevant ministries will brief the IMF delegation on structural benchmarks and economic reform targets. Energy sector reforms will also be a key agenda item in the talks, while circular debt targets in the power and gas sectors will also be discussed.
According to sources, successful negotiations between Pakistan and the IMF will pave the way for the release of the fifth tranche of the current loan program. Pakistan is likely to receive $1 billion in the fifth tranche, while another $200 million will be provided to deal with the losses caused by climate change.
Thus, in the event of a successful review from the IMF, Pakistan is expected to receive a total of $1.2 billion.
According to sources, the formation of a new system for the use of local taxes and the distribution of resources is part of the proposed roadmap. Along with the formation of an administrative structure, attention is also being paid to integrating financial matters, for which the suggestions of the International Monetary Fund will also be included in making the tax system effective.