IMF Proposes Fertiliser, Pesticide Tax Hike in Budget

The International Monetary Fund (IMF) has pressed Pakistan to hike the Federal Excise Duty (FED) on fertiliser from 5% to 10% and impose a new 5% tax on pesticides in the upcoming federal budget, according to The News. These tax proposals, if adopted, could extract Rs30 to 40 billion from farmers in the next fiscal year, a move that could strain the agricultural sector. Yet, the government is fiercely negotiating for lower rates or exemptions, citing the looming Agriculture Income Tax (AIT)—set to launch on July 1, 2025—which will already burden farmers with significant revenue demands.

On Wednesday, May 21, 2025, IMF Middle East Director Jihad Azour met Finance Minister Mohammad Aurangzeb at the Ministry of Finance to finalize budget details, intensifying the debate. Prime Minister Shehbaz Sharif is scheduled to meet Azour today, Thursday, May 22, 2025, to push for relief and lessen the tax burden on farmers amid these new levies. Separately, discussions are advancing on uniform taxation across all income sources and a single turnover-based registration threshold for income tax and General Sales Tax (GST), aiming to simplify compliance for businesses.

Web context reveals the IMF’s focus on broadening Pakistan’s tax base, with agriculture often targeted (e.g., AIT implementation, web ID: 0). Posts found on X show farmer unrest—many fear the cumulative tax impact, while some criticize IMF policies as anti-agriculture (post ID: 5). Critically, the narrative of “revenue generation” may underplay sectoral fallout—web sources note agriculture’s 24% GDP contribution (web ID: 22), and X sentiment suggests protests if taxes rise, indicating potential social unrest and economic risks.