ISLAMABAD: The International Monetary Fund (IMF), as part of its conditions, is reportedly pushing for a significant increase in sales tax on electric vehicles in the upcoming federal budget, raising it from 1% to 18%.
According to sources, the next fiscal budget is expected to include measures aimed at reducing or completely eliminating tax exemptions and concessional packages currently available to the public and business sectors.
Officials say the IMF has strongly objected to what it describes as “tax relief for the elite,” calling for the immediate withdrawal of such incentives.
Sources further claim that the IMF has categorized electric and hybrid vehicles, along with solar panels, as luxury or elite-oriented goods, arguing that their buyers largely belong to wealthier segments of society and therefore should not benefit from tax concessions.
Under the proposed changes, the current 1% sales tax on electric vehicles is likely to be increased to 18%, while the existing reduced 8% tax on hybrid vehicles may also be abolished and replaced with the standard 18% rate.
The government is currently negotiating a new long-term bailout package with the IMF, and sources suggest that increasing the tax net and removing exemptions has become a key requirement, leaving limited fiscal flexibility for the authorities.
