ISLAMABAD: The federal government is considering the introduction of a new local tax in Islamabad if the capital is granted a separate administrative or provincial-type status, according to sources in the Ministry of Finance.
The proposed tax would be intended to generate additional revenue for operating the capital’s administrative structure and funding essential public services. Potential areas of spending include healthcare, education, welfare programs and infrastructure development within Islamabad.
Proposal Linked to Islamabad’s Future Status
The proposed taxation framework is part of broader discussions surrounding a possible change in Islamabad’s administrative status. Government officials are assessing the financial requirements that would arise under the proposed arrangement, including the cost of maintaining public services and administrative functions.
However, the government has not yet determined the revenue target or final structure of the proposed tax.
The matter is expected to be reviewed by a subcommittee tasked with examining taxation-related issues associated with Islamabad’s proposed new status. Following this review, the proposal would move to a committee headed by Planning Minister Ahsan Iqbal before being placed before Prime Minister Shehbaz Sharif.
IMF Consultation Expected
The proposed tax measure could also be discussed with the International Monetary Fund (IMF) during its upcoming review discussions with Pakistan. Government sources indicate that the final framework may depend partly on the outcome of these consultations.
The government is considering incorporating the new revenue measure into the next federal budget, although the proposal remains under review and no final decision has been announced.
If approved, the taxation framework would represent a significant change in how Islamabad’s future administrative and public-service requirements could be financed. Further details, including the applicable tax rate, taxpayers covered and expected revenue, are expected to emerge after the government completes its internal review and consultations.
