Pakistan Finance Minister Aims to Boost Tax Revenue

In a recent announcement, the Finance Minister of Pakistan has emphasized the critical need to broaden the country's tax base. Currently, with a tax-to-GDP ratio of 9.5%, the Minister highlighted that this level is insufficient for the nation's financial sustainability. The primary objective is to include all individuals in the tax net and transition them into active taxpayers, ultimately aiming to eliminate the non-filer category within the country.

The unveiling of the federal budget for the fiscal year 2024-25 revealed an ambitious tax revenue target of 13 trillion rupees ($46.66 billion), signifying a substantial increase from the previous year. This budget not only aims to achieve the revenue target but also seeks to strengthen the case for a new agreement with the International Monetary Fund (IMF). The focus is on reducing the public debt-to-GDP ratio and improving Pakistan's balance of payments position.

The Finance Minister expressed confidence in meeting the tax collection target and highlighted the registration of 31,000 traders with the Federal Board of Revenue (FBR). He also mentioned the previous implementation of a fixed tax regime for traders in 2022, which he believed could have generated significant revenue if not revoked.

To enhance revenue generation, the Finance Minister stressed the importance of coordinated efforts between the federal and provincial governments. Measures such as evaluating the necessity of ministries at the federal level and controlling expenditures, including adjusting government employees' salaries for inflation, were mentioned.

In terms of revenue strategies, the Finance Minister proposed an increase in the petroleum development levy (PDL) but clarified that there are no plans to impose a sales tax on petroleum products. He expressed optimism that the recent reduction in the key policy rate would help manage inflation effectively.

The government's focus on expanding the tax base and increasing revenue in the upcoming fiscal year demonstrates a commitment to strengthening Pakistan's financial position. By targeting a higher tax revenue goal, implementing strategic measures, and fostering collaboration between different levels of government, Pakistan aims to achieve greater financial stability and pave the way for sustainable economic growth.