THE IMF is so insistent on the imposition of a Value Added TAX (VAT) that it has relaxed the targets it had set for Pakistan to achieve in the next financial year, 2010-11, including the target for the budget deficit as a percentage of the GDP. It must not be assumed that the IMF has abandoned anything, just that it hopes to achieve the results it had intended from the original targets, from the imposition of the VAT. Those results include the economic subordination of Pakistan, so that it continues to be dependent on IMF handouts, and continues to toe the US line generally, but particularly in the War on Terror. This is particularly important after the USA has planned to withdraw from Afghanistan towards the end of the financial year. It has gone to the extent of interrupting the Doha talks on the Budget for a team to rush to Islamabad to seek a presidential assurance on the imposition of the VAT, though such a meeting has been denied by the presidential spokesman. The proposed VAT, which is being dismissed by government spokesmen as a mere renaming of the already existing sales tax, has been opposed by both economists as well as the business community. The government, however, has long made clear its commitment to levy it from the coming budget. Any doubts that this was anything but an IMF condition for continued balance of payment support should now disappear. This new tax aimed at the business community comes at the same time as the present government has silently abandoned its commitment to tax agriculture as well as speculative businesses like real estate and the stock exchanges. The proposed VAT is stuck on the National Finance Commission Award decision that services shall be taxed by the provinces. The Sindh government has to collect this tax, and this has created a number of issues which need resolution. The President has intervened, again showing that the apparent empowerment of the PM is only a polite fiction, even after the passage of the 18th Amendment. Only those taxes should be imposed which serve the national interest, not those which are mere conditions of multilateral lending agencies which base their decisions on political grounds, or rather obedience to the USA. IMF support to Pakistan is based on its obedience in the War on Terror, and this has allowed it to dictate an unpopular tax harmful to the economy. The Pakistan government has fallen in with the IMFs wishes as much as it has with American, which it has done in the case of the VAT as well.