IMF tax plan may raise solar prices in Pakistan

ISLAMABAD: Solar panel prices in Pakistan have the possibility of rising due to a new tax imposition by the International Monetary Fund in the coming budget.

The International Monetary Fund has asked the government of Pakistan to impose a new tax of 18% General Sales Tax on solar systems by removing tax exemptions. If approved, solar panel prices in Pakistan will rise for those who are adopting solar power due to high electricity bills.

This is part of a larger strategy for the government to increase tax revenues to over Rs15.6 trillion. The International Monetary Fund has also asked the government of Pakistan to impose a new tax of 18% General Sales Tax on fuel, such as petrol, which is currently being sold at zero percent. This could cause the price of petrol to rise, affecting food inflation.

The International Monetary Fund has also asked the government of Pakistan to remove tax exemptions on newly built houses. The government has also been asked to increase taxes on small traders.

At present, the cost of solar panels depends on the brand and capacity. Low-capacity solar panels can be purchased for Rs. 9,500, while high-end ones can cost up to Rs. 23,700. These costs may also rise with the imposition of the new tax.

Pakistan is facing difficulties in meeting its tax targets because of the reduction in imports, high oil prices, and low business activity.

If these proposals come into effect, people might soon experience high fuel costs, high solar panel costs, and a high cost of living.