Pakistan faces a new challenge as the IMF proposes taxing pensioners as part of a bailout package negotiation. This move, aimed at raising additional revenue, could significantly impact the country’s already struggling fixed-income population.
The IMF’s proposal involves withdrawing income tax exemptions currently enjoyed by pensioners, both civilian and military. This would generate an estimated Rs22-25 billion annually for the government. Additionally, the global lender recommends taxing pensions and gratuities, including those received from private schemes and government commutation options.
Taxing pensioners has raised concerns about the burden it places on vulnerable citizens already facing high inflation. Pensioners, along with salaried individuals, have seen a steady erosion of purchasing power without a corresponding decrease in their tax obligations.
The IMF’s push for taxing pensioners is part of a larger goal: increasing tax revenue by Rs1.3 trillion. This broader strategy also includes proposals for new taxes on salaried individuals and a review of tax benefits for sole proprietors.
While the government seeks additional funds to address its financial needs, the impact on pensioners remains a significant point of contention. The negotiations between Pakistan and the IMF will determine the final fate of this controversial proposal.
