ISLAMABAD " Imposition of rural agriculture income tax, a provincial subject under the constitution, would be a pre-condition to loaning by the International Monetary Fund (IMF) in addition to $7.6 billion standby loan, TheNation learnt on Monday. Adviser to Prime Minister on Finance Shaukat Tarin had stated the other day that Pakistan was to request for additional $4.5 billion from the IMF while negotiating standby loan's first review currently underway in Dubai. Additional funding, the sources said, would require Pakistan to fulfil longstanding demand of the international financial institutions to impose farm income tax. Although the agriculture sector has no exemption from indirect taxation including general sales tax on agri-inputs, the IMF wants to see Pakistani farmers under the net of direct tax, the sources added. According to the sources, getting loans from the IMF was always possible but subject to certain conditions requiring the government to forego economic sovereignty. The sources pointed out that even in the case of 23-month standby loan of $7.6 billion the IMF imposed precondition of increasing interest rates to what they believe control inflation. Had it not been the condition of the IMF, the government would not have increased interest rates by two per cent last year to take it to 15 per cent, the sources said quoting highest offices in the finance ministry. Even the cabinet members have expressed in the Parliament that interest rates hike has choked industrial activity in the country. "You cannot go for such a risky treatment that might kill the patient," Former Finance Minister Dr Salman Shah remarked on government's going by IMF prescriptions in handling the ailing economy. The government could have negotiated with the IMF that such a tightening of the economy would virtually stagnate it the way it is happening around, he added. Regarding farm tax, he said, "You cannot impose any tax without appropriate mode of collection. First of all, it is a provincial subject and the federal government cannot go straight to impose farm income tax," he added. "In the first place, the agriculture sector should be deregulated. Give them international rates, inputs of international quality and standards, and incentives to increase produce, and then you could motivate them to pay taxes as well. Therefore, there should be safety wall to protect farmers against the corruption on part of the collection functionaries," explained Dr Salman Shah. "Otherwise," he added, "expecting tax from the farmers like the way industry pays it is simply nanve as it is not possible." On the government leaning down on the IMF, he said, "When you are left with no other options like foreign investment, commercial capital (GDRs), and even debt facilities, you are stuck up in such a riddle of multilateral loans." "As long as, we do not put right the investment climate of ample governance, law and order, and interest rates, the investor would not look back at Pakistan's economy starving to stagnation," said Shah who held portfolio of Finance in Shaukat Aziz's cabinet Talking about inflation as a problem when the international crude oil on top of other commodities has gone down from $147 to $35 a barrel simply does not make any sense. The government should rather help expand economic activity rather than contracting it. Increasing the cost of doing business in the wake of governments' world over intervening with capital injections to reverse global recession would lead the economy to standstill. He concluded by saying that the government's blindfold following the IMF prescription has been turning the employment into unemployment.