IMF Urges Fairer Tax System as Salaried Pakistanis Pay Rs629 Billion

IMF Urges Fairer Tax System as Salaried Pakistanis Pay Rs629 Billion

The International Monetary Fund has urged Pakistan to build a fairer tax system, warning that the burden of its IMF-backed programme is falling hardest on salaried workers while powerful sectors pay little.

Jihad Azour, the IMF's director for the Middle East and Central Asia, made the case at a two-day tax reform workshop in Islamabad on October 20–21, titled “Reforms for a Modern and Growth-Friendly Tax System in Pakistan,” organised with the Finance Ministry.

Azour called for a broader tax base, stronger revenue administration, fewer tax exemptions and protection of essential public spending, saying a “fairer tax system can encourage compliance” and strengthen public trust.

The numbers tell the story. The salaried class's annual income tax contribution has surged from Rs391 billion before the programme to Rs629 billion by June 2026. Meanwhile, income tax collection from real estate fell 38 percent to just Rs35.2 billion in the first quarter of the current fiscal year, after a 50 percent cut in tax rates for the sector. Agriculture tax collection also remained limited, with Punjab and Sindh together collecting only Rs5.1 billion.

Finance Minister Muhammad Aurangzeb, who also addressed the workshop alongside IMF fiscal affairs director Rodrigo Valdés, outlined the government's progress over the past two years. The sessions covered a unified sales tax regime, simpler income taxation and provincial tax revenues.

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