The government has proposed a new local tax on Islamabad residents if the federal capital is made a separate administrative unit, sources in the Ministry of Finance said on Tuesday.
The proposed tax would generate revenue to run public services and the administrative system in Islamabad. The funds would be spent within the capital on hospitals, schools, welfare programs and other infrastructure.
The proposal is expected to be discussed with the International Monetary Fund (IMF) during its upcoming review talks with Pakistan.
The government plans to include the tax in next year’s budget, but it has not yet finalized how much revenue would be needed to run the proposed administrative setup.
The proposal will first be reviewed by a subcommittee examining taxation issues linked to Islamabad’s proposed new status. It will then go to a committee headed by Planning Minister Ahsan Iqbal and then Prime Minister Shehbaz Sharif.
A final decision on the tax is expected after discussions with the IMF.
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