IMF Calls Pakistan’s Tax System Unfair as Salaried Payments Reach Rs629 Billion and Realty Revenue Falls 38 Percent

ISLAMABAD: The International Monetary Fund has told Pakistan, in plain terms, that it needs a fairer tax system — because at the moment the burden keeps landing on the people already inside the net. Opening a two-day tax workshop with the Finance Ministry in Islamabad on Tuesday, the Fund’s regional director Jihad Azour said a fairer system encourages compliance, and a more neutral one lets productive firms grow instead of staying small or informal.

The numbers tell their own story

Figures shared at the workshop show the salaried class paid Rs391 billion a year before the IMF programme began. Within two fiscal years that had climbed to Rs629 billion by June 2026. Realty went the other way: income tax from real estate fell 38 percent to just Rs35.2 billion in the first quarter of this fiscal year, Rs22 billion less than a year earlier, after rates for the sector were cut by half. Punjab and Sindh together collected only Rs5.1 billion in agriculture income tax, well short of their targets, and by October 15 just 137 new retailers had joined the traders’ scheme against an annual target of one million.

From stabilisation to growth

Azour credited Pakistan with restoring macroeconomic stability through an era of shocks, but said the next milestone is turning that stability into durable growth — moving beyond cycles of adjustment towards a more competitive, investment-friendly economy under the Extended Fund Facility. Broadening the tax base, cutting tax expenditures, strengthening revenue administration and coordinating federal and provincial reforms, he said, are the priorities. The workshop continues on Wednesday with six sessions, including a unified sales tax and digital tax administration.