Why in News ?
Talks between Pakistan and the IMF have ended inconclusively due to a disagreement over new income tax rates for salaried and non-salaried persons and the imposition of a standard 18 per cent sales tax on agriculture and health sector goods, according to a media report on 9th June.
What is IMF ?
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 190 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of last resort to national governments, and a leading supporter of exchange-rate stability.
Today’s News :
Discussions are revolving around whether to charge a new backbreaking 45 per cent income tax from salaried and non-salaried individuals on a monthly income of just over Pakistani Rs 4,67,000, sources said.
At present, the maximum rate of 35 per cent applies to a monthly income of over Pakistani Rs 5,00,000.
However, both sides have converged on the issue of increasing the income tax burden on exporters in the next budget who paid a paltry sum of Pakistani Rs 86 billion this year, which is 280 per cent less than the taxes paid by the salaried people.
On the government’s proposal of increasing the annual threshold of taxable income to Pakistani Rs 9,00,000, the IMF is asking for the maximum income tax rate to be increased from 35 per cent to 45 per cent.
However, the government is unwilling to increase the maximum rate for salaried individuals to 45 per cent but showed flexibility to keep the taxable income threshold at the current Pakistani Rs 6,00,000.