ISLAMABAD (The COW News Digital ) The federal government has begun considering proposals to introduce a new local tax in Islamabad if the capital is granted greater autonomy as a separate administrative unit, according to sources familiar with the matter.
The proposed tax would be aimed at generating revenue within the federal capital to finance essential public services and administrative infrastructure. Officials are examining ways to ensure that the revenue collected from Islamabad remains available for development and public services within the capital’s jurisdiction.
Initial proposals include allocating funds towards hospitals, schools, colleges, other educational institutions, welfare initiatives and the city’s administrative infrastructure. However, the final structure, scope and estimated revenue from the proposed tax have yet to be determined.
According to sources, the proposals are expected to be discussed with an International Monetary Fund (IMF) delegation during negotiations for the fifth review of Pakistan’s Extended Fund Facility programme. The discussions are scheduled to begin this month.
The proposed local taxation system could potentially be incorporated into the federal budget for the next financial year, subject to approval from the relevant authorities and the IMF.
Sources said the Federal Board of Revenue (FBR) will initially prepare detailed taxation proposals. These recommendations will then be presented to a subcommittee established to examine taxation and infrastructure requirements linked to the proposal for making Islamabad an autonomous unit.
After approval by the subcommittee, the proposals will be forwarded to a committee headed by the federal planning minister. Following its consideration, the recommendations are expected to be submitted to Prime Minister Shehbaz Sharif for further approval.
The final decision would also take into account the outcome of discussions with the IMF.
Meanwhile, the Ministry of Finance has instructed relevant ministries and government institutions to prepare data and reports ahead of the upcoming economic review talks with the IMF.
The discussions are expected to cover structural benchmarks, economic reform targets and reforms in the energy sector. Issues related to circular debt in the electricity and gas sectors are also likely to remain important agenda items.
If Pakistan successfully completes the fifth review, the country could become eligible for the release of the next tranche under the existing IMF programme. Sources estimate that Pakistan may receive around $1 billion under the programme, along with an additional $200 million aimed at addressing climate-related losses.
This could bring the expected total disbursement to approximately $1.2 billion following a successful review.
The proposed local taxation framework is part of a broader plan to improve Islamabad’s financial management, strengthen its administrative structure and establish
