IMF flags unfair tax system

Jihad Azour, the IMF's Regional Director, called for a fairer and more neutral tax structure at a two-day conference that opened on Tuesday. He said such a system could improve compliance and let productive firms grow rather than stay small or informal. The Express Tribune reported that Pakistan's tax system has become more unfair over the two years since the Fund's programme began.

The report says salaried workers have carried a heavier load while retailers, agriculture and property sectors contributed little. Realty income tax collection fell 38% to Rs35.2 billion during the opening quarter of the current fiscal year, a drop of Rs22 billion after the government cut the sector's income tax by 50%. Only 137 new retailers had signed up for the trader scheme by October 15, against a yearly goal of one million.

Agriculture income tax collections in Punjab and Sindh reached Rs5.1 billion by June, while salaried taxpayers contributed Rs629 billion by June 2026, up from Rs391 billion before the programme. Azour also stressed predictable rules, simpler taxes and a medium-term strategy with clear objectives. The report notes that the cash-based trader scheme, which the IMF endorsed, encourages informality.