Pakistan faces a severe economic crisis marked by high inflation and mounting debt. The country is still waiting for the formal approval of a $7 billion IMF loan, which includes tough measures like tax hikes. However, the focus should be on curbing revenue loss from illicit trade rather than imposing additional taxes on the public. Illicit trade costs Pakistan around $150 million per month according to some reports, with the real-estate sector alone evading Rs500 billion in taxes each year while the illicit tobacco trade results in Rs310 billion in losses.
Finance Minister Muhammad Aurangzeb has noted that without raising tax rates, Pakistan will continue to rely on IMF loans. Yet, raising taxes alone isn't a viable solution. The government should instead implement a comprehensive strategy to combat illicit trade, focusing on enhanced border control, stricter regulations, and better compliance monitoring.
Usama Ghulam Rasool
Karachi
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