https://arab.news/g8bqm
- Muhammad Aurangzeb says the government is striving to digitize tax system for improved revenue collection
- He says that he wants to take the country to a more sustainable tax-to-GDP ratio in the next three to five years
ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb emphasized on Wednesday it was crucial to widen the tax net by removing the “non-filer category” after presenting the first federal budget of the newly elected Pakistani administration which he said was in line with the International Monetary Fund (IMF) requirements.
The non-filer category includes those individuals or entities who, despite earning taxable income, do not file returns and refuse to be formally documented or contribute to the tax base as required.
Pakistan has faced significant challenges with tax evasion and a low ratio of tax filers compared to its population. A considerable number of potential taxpayers either avoid taxes altogether or do not file their returns, which leads to substantial revenue losses for the government.
Speaking to Pakistan’s Geo TV, Aurangzeb said he wanted to take the country to a sustainable tax-to-GDP ratio in the next three to five years.
“I don’t understand this term of non-filer,” he said. “This is the only country where there is a category of non-filers. What is a non-filer? Either you are paying taxes and you are on the active tax list or you are not.”
“The eventual end goal is that we have to eliminate this non-filer category from this country,” he added.
The government has set an ambitious revenue collection target of Rs13 trillion, which comes to about $47 billion, in the next fiscal year raise the overall tax-to-GDP ratio of 9.5 percent.
The minister said the budget had introduced punitive measures for those who refused to file taxes so they thought twice before refusing to bring their income on record.
Asked about the enforcement of tax reforms, he said the government was striving to digitize the whole system.
“The end-to-end digitization will help us with several things,” he said. “Why don’t people want to come into the [tax] net? They are afraid of being harassed. They think they will not be treated properly. The more we remove the human intervention in FBR [Federal Board of Revenue], that is the way to create trust and earn trust.”
Aurangzeb said the government had decided to treat health, education and agriculture as priority sectors and protected the salaried class.
However, he reiterated that the government’s aim was to move a direction where everyone was contributing to the national economy.