Pakistanis could face more than Rs. 1.1 trillion in additional taxes and revenue measures in fiscal year 2026-27 as the federal and provincial governments move to meet new fiscal targets linked to the International Monetary Fund programme.
The federal government has asked all four provinces to raise over Rs. 400 billion in extra taxes during FY2027 as part of broader reforms aimed at strengthening public finances and maintaining budget discipline.
Under the proposed targets, Sindh is expected to generate around Rs. 200 billion in additional taxes, Punjab Rs. 175 billion, Khyber Pakhtunkhwa Rs. 45 billion, and Balochistan nearly Rs. 20 billion.
The revenue plans were reviewed during a virtual meeting chaired by Finance Minister Muhammad Aurangzeb with provincial finance ministers as part of budget preparations for the next financial year.
Officials said the provincial tax measures are intended to generate revenues equal to roughly 0.3 percent of GDP. In parallel, the federal government is expected to raise another Rs. 430 billion through fresh taxes and improved enforcement, while petroleum levy collections are projected to bring in an additional Rs. 260 billion.
Taken together, these steps would push the total new revenue effort beyond Rs. 1.1 trillion in FY2027.
The IMF is pressing provincial governments to strengthen collections from agriculture income tax, sales tax on services, property taxes, stamp duties, and registration fees. To support this effort, the Federal Board of Revenue has started sharing income tax and sales tax return data with provincial authorities to improve enforcement and widen the tax net.
Punjab told the meeting it plans to expand sales tax on services to 40 major cities, while the federal government urged Sindh to step up tax collection from the agriculture and real estate sectors.
The IMF has highlighted agriculture as one of Pakistan’s most undertaxed sectors despite accounting for nearly one-quarter of the economy. It estimates the effective tax rate on agriculture at just 0.3 percent.
Meanwhile, the IMF has set a petroleum levy collection target of Rs. 1.727 trillion for the next fiscal year, around Rs. 260 billion higher than the target for the current year.
The federal government has also assured the IMF that provinces will avoid policy measures that could weaken commitments made under the programme, as Pakistan aims to maintain fiscal discipline and achieve a primary budget surplus of 2 percent of GDP in FY2027.
