Finance minister seeks to abolish non-filer category for widening tax net

ISLAMABAD: Finance Minister Muhammad Aurangzeb has emphasized the need for widening the tax net, saying that the country cannot run with a 9.5 percent tax-to-GDP ratio.

“We have to bring everyone into the tax net. We are aiming to bring everyone on the active taxpayers’ list,” said the finance czar while speaking on Geo News programme Aaj Shahzeb Khanzada Kay Sath on Wednesday. “We have to abolish the non-filer category in the country,” he added.

His statement comes hours after he unveiled the federal budget for the fiscal year 2024-25 in the National Assembly, with a total outlay of Rs18.9 trillion.

The federal government has set a challenging tax revenue target of 13 trillion rupees ($46.66 billion) for the year starting July 1, a nearly 40% jump from the current year as the budget looked to strengthen the case for a new bailout deal with the International Monetary Fund (IMF).

Key objectives for the upcoming fiscal year include bringing the public debt-to-GDP ratio to sustainable levels and prioritising improvements in Pakistan’s balance of payments position, the government’s budget document showed.

Pakistan has projected a sharp drop in its fiscal deficit for the new financial year to 5.9% of GDP, from an upwardly revised estimate of 7.4% for the current year.

Speaking about the federal budget, the finance minister said the tax-to-GDP ratio has to be increased in order to put the country on the right path. “We are in alignment with IMF on budget,” Aurangzeb said, hoping that the government will easily achieve its tax collection target.

He said as many as 31,000 traders have got themselves registered with the FBR. Finance Minister Aurangzeb also praised his predecessor Miftah Ismail for introducing a fixed tax regime in 2022 for the traders, saying the government would have collected a substantial revenue had the policy not been revoked at that time. Along with the provinces, Aurangzeb said the Centre required to take steps to increase revenue generation. “The prime minister has formed a committee to ascertain which ministries are required and which are not in the Centre,” he said. Highlighting the need for curtailing expenses, the finance minister said the salaries of government employees have been increased in the light of inflation. While the government has proposed increasing the petroleum development levy (PDL) by Rs20 to Rs80, the finance minister clarified that no proposal is under consideration to impose a sales tax on petroleum products. He also hoped that the recent cut in the key policy rate would help in controlling inflation.