ISLAMABAD (The COW News Digital)The federal government has decided to present its proposed tax-cut package to International Monetary Fund (IMF) for approval before implementation, following recommendations from a private-sector income-tax reform panel. The move aims to pave the way for relief to both salaried individuals and corporate taxpayers
The reform panel, led by a private-sector working group, submitted a comprehensive Rs 975 billion relief proposal to Shehbaz Sharif. Key suggestions included a 25 percent reduction in income tax for salaried workers, the scrapping of an income tax surcharge on high earners, the removal of a wealth levy in the form of a capital value tax on foreign assets, and the gradual reduction — ultimately elimination — of several taxes such as the “super tax,” minimum income tax, corporate dividend tax, and additional levies on exporters
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Under the proposed plan, immediate relief is estimated to cost more than Rs 600 billion. For the corporate sector, abolition of the super tax alone could provide about Rs 190 billion in relief, while a phased reduction of the corporate income tax rate to 25 percent could yield another Rs 170 billion. Eliminating minimum tax and dividend tax could further relieve businesses by another substantial margin.
Recognizing the financial constraints tied to the IMF program, the government has formed a special committee — headed by the finance minister — to craft a roadmap for implementing the tax reforms in a manner acceptable to the IMF. The committee includes key members such as the panel’s chairman and a state minister for finance.
For salaried individuals, the proposed 25 percent income-tax reduction could significantly ease the burden on working-class households. Meanwhile, businesses hope that corporate tax cuts and removal of multiple levies will spur investment and growth. Supporters argue that a lighter and fairer tax regime could be a long-term boost for the economy, encouraging compliance and broadening the tax base.
However, any final decision depends on the IMF’s approval. Observers note that while the relief package promises wide economic benefits, it must be balanced against revenue shortfalls and commitments under the existing IMF program. Until the IMF gives a green light, the proposed changes are unlikely to be implemented.
As Islamabad prepares to enter talks with the IMF, all eyes remain on the international lender’s response — which could shape Pakistan’s fiscal direction and economic prospects for the upcoming budget year.
