Talks between Pakistan and the International Monetary Fund (IMF) have ended inconclusively due to disagreements over new income tax rates for both salaried and non-salaried individuals. The imposition of a standard 18 per cent sales tax on agriculture and health sector goods further complicated negotiations, according to a media report on Sunday.

Discussions on Friday between Pakistani authorities and the IMF focused on unresolved issues related to taxation and the energy sector. Sources cited by the Express Tribune newspaper revealed that both parties could not reach a consensus on critical matters such as the income tax threshold, the merger of tax rates for salaried and non-salaried individuals, and the maximum income tax rate for individuals.

The IMF’s insistence on broadening the tax base by reducing exemptions and increasing the burden on higher earners has been met with resistance from Pakistan, which is concerned about the potential impact on its middle-class population. The proposed 18 per cent sales tax on agriculture and health sector goods also remains a contentious issue, with Pakistani authorities wary of the implications for these essential sectors.

This stalemate comes at a critical time for Pakistan, which is grappling with economic challenges and seeking to secure financial assistance from the IMF. The inability to resolve these key fiscal issues may delay the disbursement of much-needed funds, further straining the country’s economic situation.

As negotiations continue, both sides are expected to work towards finding a middle ground that addresses the IMF’s fiscal consolidation demands while mitigating the adverse effects on Pakistan’s economy and its citizens.