Pakistan’s Senate Standing Committee on Finance raised concerns today about a staggering Rs.5,000 to Rs.6,000 billion annual tax gap identified by Finance Minister Muhammad Aurangzeb.
The Minister, while presenting the Finance Bill 2024 for review, acknowledged the “massive tax leakage” and stressed the urgent need to plug this hole to generate revenue. He emphasized stricter enforcement of tax laws and digitization of the Federal Board of Revenue (FBR) as key measures.
Aurangzeb outlined several initiatives, including the “Tajir Dost Scheme” which has registered 31,000 retailers for tax collection starting July 2024. He also mentioned the expansion of the track and trace system beyond cigarettes to encompass sectors like cement.
The Minister highlighted the importance of increasing Pakistan’s tax-to-GDP ratio from the current 9.5% to a targeted 13% within three years. He emphasized this as essential for both economic stability and potential IMF program considerations.
To address the issue of non-filers, Aurangzeb announced punitive measures including mandatory National Tax Numbers (NTNs) for obtaining passports. He expressed a desire to eliminate the concept of non-filers altogether and introduce a system of increased “tax in transaction.”
The Minister assured the committee of his commitment to transparency and reducing corruption through digitization of FBR systems. He also addressed queries on electric vehicle taxation, acknowledging its potential for revenue generation.
