The government’s attempt to cut electricity tariffs has met with a stumbling block rejection of the proposal to cut sales tax, which was placed by Islamabad before the International Monetary Fund (IMF). The sales tax reduction was advised by the Ministry of Energy, but the IMF did not accept this because of the clauses it has with its given loan.
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In fact, the IMF reiterated that any such exemption from new taxes will not be useful in achieving tax collection targets. Currently, there are 18% Goods and Services Tax (GST) on the total bill amount for consumers, and another sales tax on fuel cost adjustment.
This decision emphasized the difficult balancing act that Pakistan has to perform in establishing fiscal reforms and relief for financially harried consumers.