ISLAMABAD Pakistan AP Cash-starved Pakistan on Tuesday raised the general sales tax from 12.5 percent to 15 percent in a bid to boost revenues and meet a key condition for loans from the International Monetary Fund. According to a law passed by President Rafiq Tarar ``circumstances exist which render it necessary to take immediate action.'' A finance ministry official said the general sales tax increase was promised by the government last week during meetings with the IMF. The meetings resulted in a dlrs 5.5 billion bailout package for Pakistan. ``The raise in general sales tax is one of the many up-front measures which the government has to take before the IMF board meets to give a final nod to a bailout package for Pakistan'' said the ministry official who spoke on condition that his name not be mentioned. Apart from increasing the sales tax the IMF also is seeking an agricultural tax revamped tax system structural reforms in the public sector the recovery of billions of rupees in outstanding loans and unpaid utility bills the official said. The IMF package will have to be approved by the IMF board later this month before taking effect. Without the bailout package Pakistan will surely default on its whopping debt of dlrs 32 billion. Haneef Janoo former president of the Karachi Chamber of Commerce and Industries said the tax hike will hit the poor the hardest and encourage tax evasion in a country where barely one million people pay taxes. ``The government is sticking to the same old policy of raising taxes to increase revenues which will result in more tax evasion in the absence of effective system of checks and balances'' he said. But Nadeem Naqvi chief analyst of the International Asset Management Company a financial adviser to international investment funds said the tax increase shows that the government is seriously focusing on the revenue generation commitments made with the global donors. ``There will be some opposition and protest from the business community but given the lack of alternatives the government has no choice other than to implement its decision'' he told The Associated Press. Chairman of the Karachi Stock Exchange Yaseen Lakhani said the government should not be soft on the issue of tax collection. ``The government should be tough with those who don't want to pay taxes'' he said. APW19981201.0481.txt.body.html APW19981201.1335.txt.body.html