The IMF Program 19.2. The Reform Agenda The IMF program focuses strongly on taxation reforms to lead to a sizeable increase in the tax-to-GDP ratio. The proposed tax reforms include the following: Corporate Income Tax: withdrawal of tax credits and allowances and elimination of exemptions. Personal Income Tax: The first proposal is to increase the progressivity of the tax by reducing the number of slabs from 11 to 5. Simultaneously, there will be a halving of tax credits and allowances. Sales Tax: The proposal is to eliminate non-standard preferential rates and tax exemptions on items in the different schedules of the Sales Tax Act, 1990. A fundamental reform proposed is the integration of Federal sales tax on goods and the Provincial sales on services along with harmonization of the tax rates. Also, the petroleum levy is to be raised to Rs 30 per liter. Economy in expenditure is to be achieved primarily by the reduction in subsidies to SOEs and restricting the increase in contingent liabilities due to larger guaranteed debt of the SOEs. A program, referred to as the triage, is the decision on each SOE as to whether it should be liquidated, privatized or exist in its present form. Further, a new law on SOEs has to be enacted. A list of the structural benchmarks is given in Chart 19.1. Chart 19.1: Structural Benchmarks in the IMF Program(for 2021) Prior Action(to March 21) 1. Adoption of income tax reform 2. Submission of amendments to SBP Act 3. Adoption by Parliament of Amendments to NEPRA Act 4. Rise in electricity tariff by Rs 1.95 per kwh and quarterly adjustment of Rs 1.62 per kwh 5. Approval of by Cabinet of Circular Debt Management Plan Structural Benchmarks 1. No further tax amnesties 2. No further preferential treatment or exemptions 3. Presentation of Mid-Year Review in line with the PFM Act Status Yes No Yes Yes Yes No Yes Yes 185