ISLAMABAD: Finance Minister Muhammad Aurangzeb has underscored the necessity of expanding the tax base, asserting that the country cannot function effectively with a 9.5% tax-to-GDP ratio.
“We must include everyone in the tax net. Our goal is to ensure that all eligible individuals are on the active taxpayers’ list,” stated Aurangzeb during an appearance on Geo News’ programme on Wednesday.
“We need to eliminate the non-filer category in the country,” he added.
His remarks came shortly after presenting the federal budget for the fiscal year 2024-25 in the National Assembly, which has a total outlay of Rs18.9 trillion.
The federal government has set an ambitious tax revenue target of 13 trillion rupees ($46.66 billion) for the year starting July 1, representing a nearly 40% increase from the current year’s budget. This move aims to bolster the case for a new bailout deal with the International Monetary Fund (IMF).
Key objectives for the upcoming fiscal year include reducing the public debt-to-GDP ratio to sustainable levels and prioritising improvements in Pakistan’s balance of payments position, according to the government’s budget document.
Pakistan is projecting a significant decrease in its fiscal deficit for the new financial year to 5.9% of GDP, down from an upwardly revised estimate of 7.4% for the current year.
Discussing the federal budget, the finance minister emphasized the importance of increasing the tax-to-GDP ratio to set the country on the right path.
“We are in alignment with the IMF on the budget,” Aurangzeb said, expressing confidence that the government will meet its tax collection target.
He noted that 31,000 traders have registered with the FBR.
Aurangzeb also commended his predecessor, Miftah Ismail, for introducing a fixed tax regime in 2022 for traders, remarking that the government could have collected substantial revenue had the policy not been revoked.
He stressed that both the provinces and the central government need to take steps to boost revenue generation. “The prime minister has formed a committee to determine which ministries are necessary and which are not,” he said.
Highlighting the need to control expenses, Aurangzeb mentioned that government employees’ salaries have been increased in response to inflation.
While the government has proposed increasing the petroleum development levy (PDL) by Rs20 to Rs80, the finance minister clarified that there is no plan to impose a sales tax on petroleum products.
He also expressed hope that the recent reduction in the key policy rate would help control inflation.
