By Staff Reporter
ISLAMABAD: Pakistan’s tax return filers have surged by over 100 percent to 3.2 million, Finance Minister Muhammad Aurangzeb said Sunday, as the government steps up efforts to widen the country’s narrow tax base and shore up its fragile economy.
“There were 1.6 million filers until this time last year. This has now doubled,” Aurangzeb said at a news conference. “We are now close to 3.2 million filers.”
The significant increase is attributed to the government’s efforts to implement reforms and widen the country’s chronically low tax base, a key demand by the International Monetary Fund (IMF) in exchange for a $7 billion loan program.
Aurangzeb said over 723,000 new filers were registered this year, compared to 300,000 last year. “This proves that we are walking the talk.”
Pakistan aims to collect $46 billion through taxes this financial year. Authorities have identified 4.9 million taxable persons using modern technology.
However, Pakistan’s $242 billion public debt remains a pressing concern, with servicing costs potentially consuming half the country’s income in 2024, according to the IMF.
To address this, Islamabad aims to reduce its fiscal deficit by 1.5 percent to 5.9 percent next year.
Aurangzeb warned non-filers would face restrictions. “Non-filers will not be able to buy vehicles, properties, or access current bank accounts and mutual funds and will face problems with cash deposits and withdrawals.”
The minister outlined measures to ensure compliance. “Going forward, the government will only allow manufacturers to sell to registered wholesalers… We will block utilities and seal premises of those not registered with tax authorities.”
Pakistan has 300,000 manufacturers, with only 14 percent registered, and 300,000 wholesalers, with only 25 percent registered for sales tax.
“All we are doing is making sure we use this data correctly to increase our tax-to-GDP ratio,” Aurangzeb added.
In a bid to tap into Pakistan’s vast informal economy, the Finance Minister announced a “war on cash” aimed at maximizing revenue potential and documenting transactions.
The government’s efforts will focus on increasing tax compliance, aiming to double the tax-to-GDP ratio. “We must declare war on cash if we aspire to join the G20,” Aurangzeb said.
Aurangzeb revealed non-filers and under-filers evade taxes of around Rs1.3 trillion annually at the individual level.
Pakistan’s economy is potentially valued at over $700 billion, double its current estimate of $325 billion, leading to over Rs7 trillion in annual tax evasion.
“To protect citizens from harassment by tax authorities, there will be an interface ensuring declared incomes and sources are transparent,” Aurangzeb said.
Aurangzeb acknowledged tax return forms are too complex for taxpayers to handle without experts and pledged to address this issue in the next budget.
The minister said the government will abolish 150,000 vacant posts and dissolve one ministry to streamline bureaucracy and reduce expenditures.
The Capital Administration and Development Division (CADD) ministry will be dissolved, Aurangzeb added.
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