Islamabad administrative unit plan proposes a new tax

ISLAMABAD: The Ministry of Finance has proposed imposing a new local tax on residents of Islamabad after the federal capital is made a separate administrative unit, sources said on Tuesday.

According to sources within the Ministry of Finance, proposals have been prepared to introduce a local tax in Islamabad to generate revenue for running basic public services and the administrative structure within the capital’s territory.

The revenue collected locally would be spent exclusively within Islamabad, with funds allocated for hospitals, educational institutions, welfare initiatives and the administrative infrastructure, the sources said.

The proposals to introduce the tax will be discussed with the International Monetary Fund (IMF) delegation during the upcoming economic review talks.

The government has proposed introducing this tax in the budget for the next fiscal year. However, a final estimate of the revenue required to operate the administrative structure has yet to be determined, according to Finance Ministry sources.

The new tax is being proposed to create fiscal space while taking into account Islamabad’s infrastructure and development requirements, the sources added.

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The proposals will first be presented to a subcommittee formed to examine taxation-related matters concerning Islamabad’s status as an autonomous administrative unit.

After approval by the subcommittee, the proposals will be submitted to a committee headed by Minister for Planning Development & Special Initiatives of Pakistan Ahsan Iqbal. Following the committee’s approval, the tax proposals will also be presented to Prime Minister Shehbaz Sharif.

A final decision on the proposed tax will be taken after the IMF’s approval during the upcoming economic review negotiations.

Economic review talks between Pakistan’s economic team and the IMF delegation are scheduled to begin this month.