Pakistan’s finance minister, Senator Mohammad Aurangzeb, has announced a major overhaul of the country’s tax system, aiming to crack down on tax evasion. In a recent interview, Aurangzeb revealed that the government plans to abolish the term “non-filers” and impose strict penalties on individuals who fail to declare their income. These non-filers will face significant restrictions that will directly affect their day-to-day activities, such as limited access to essential services.
The government has gathered extensive data on non-filers, including details about their lifestyles, vehicle ownership, and international travel. According to Aurangzeb, the time for leniency has passed, and those who continue to evade taxes will face serious consequences. This marks a decisive shift in Pakistan’s approach to tax compliance, with the government determined to broaden the tax base and ensure fairness.
Aurangzeb emphasized that the new tax reforms will reduce the burden on salaried individuals, who have long shouldered the majority of tax obligations. Meanwhile, sectors like retail, wholesale, agriculture, and real estate, which have historically been untaxed or under-taxed, will now be included in the tax net. The finance minister explained that these changes are designed to balance the tax burden and ensure that all economic sectors contribute fairly.
Addressing concerns from the International Monetary Fund (IMF) about Pakistan’s ability to manage its debt, Aurangzeb mentioned that the government has presented a comprehensive economic reform plan. He stressed that the reforms are necessary to avoid future IMF programs and bring untaxed groups into the system. While Pakistan saw a 29% increase in tax revenues last year, the tax-to-GDP ratio remains low at 9%, far below the level needed to stabilize the economy.
Aurangzeb also credited financial support from China and Saudi Arabia for helping Pakistan secure a $7 billion loan from the IMF. However, he cautioned that unless the country implements large-scale reforms, it will continue to struggle economically. The minister reiterated that achieving long-term economic stability requires bold measures, particularly in increasing the tax-to-GDP ratio.
These sweeping changes signal the government’s intent to not only strengthen its tax system but also provide much-needed relief to the working class, while ensuring that previously untaxed sectors contribute their fair share.
