ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have initiated crucial discussions ahead of the federal budget for the upcoming fiscal year, focusing on boosting revenue and promoting environmental sustainability.
Sources reveal that the IMF has proposed a carbon levy of Rs 5 per litre on petrol and diesel, expected to generate around Rs 25 billion in revenue. The collected funds are suggested to be directed towards eco-friendly projects, aligning with broader environmental goals.
For the next fiscal year, the petroleum levy is not anticipated to exceed Rs 78 per litre. At this rate, total revenue from levies on petrol and diesel could reach approximately Rs 1,423 billion. One key proposal involves using the carbon levy to support electric mobility, particularly through financing electric motorcycles and rickshaws on easy instalment plans.
In a notable development, the IMF and the Pakistani government have reportedly agreed to lift the ban on used car imports. However, to protect the domestic auto industry, a 40% higher tax on used cars compared to new ones is under consideration. This tax difference is planned to be reduced by 10% annually, with a full phase-out by 2030.
The IMF has also urged the government to eliminate tax exemptions previously granted to the former FATA and PATA regions and to impose the standard general sales tax (GST) on fertiliser.
The federal budget for 2025-26 is projected to exceed PKR 17.6 trillion, with the Federal Board of Revenue (FBR) tasked with achieving a tax revenue target of PKR 14,307 billion. Negotiations on these fiscal measures are reportedly advancing.
