The federal government has rejected a demand made by the International Monetary Fund to increase tax on luxury imports, government sources claimed on Tuesday. However, other sources said the matter had only been discussed as a ‘formality’.

The sources claimed that the IMF had asked the government to increase the tax to make sure that tax targets agreed under the deal would be met. The government sources claimed that the IMF had proposed that the taxes be increased through an ordinance.

However, the governmen reportedly rejected the demand saying that the Federal Board of Revenue had raised Rs24 billion in taxes in the last two months and the first quarter’s target of 30 billion should be easily achieved.

The government sources also claimed that IMF had expressed satisfaction with the government’s revenue collection performance.

Another source told Aaj News that while the revenue from increased tax on luxury items would be sizable, it would not contribute much to the tax targets of over Rs200 billion demanded by the IMF.

The sources added that the matter had been discussed between the government and the Fund’s team but only as a ‘formality’ since both parties understand that such measures would throttle imports completely. The sources added that both parties also understand that a high amound of taxes have already been levied on the public.