Islamabad: Federal Minister for Finance Senator Mohammad Aurangzeb has stated that if the existing flaws in the system are not addressed, the result will be zero growth in GDP. He made these remarks during a meeting of the Senate Standing Committee on Finance, where committee members, the Finance Minister, and the Chairman of the Federal Board of Revenue (FBR) were present.
During the meeting, Senator Shibli Faraz emphasized that the public expects the taxes collected to be spent on their welfare. He criticized the approach of tightening tax collection methods, such as shutting down phone lines or bank accounts, and called it inappropriate. He further noted the lack of trust between the government and the public, stressing that such measures were not the right approach to increase tax revenue.
In response, the FBR Chairman clarified that such extreme measures were not being employed by the FBR. Minister Aurangzeb acknowledged Senator Faraz’s concerns and assured that the government would work to restore trust between the tax authorities and taxpayers. He also highlighted the importance of eliminating corruption and announced that the FBR would undergo restructuring, with an increased emphasis on technology to streamline tax collection.
The Finance Minister also discussed the Tax Amendment Bill 2024, which aims to expand the tax base, noting that salaried individuals currently bear a higher tax burden. He assured that all sectors would be brought into the tax net, while the federal government would also undergo right-sizing measures to ensure efficiency.
The FBR Chairman briefed the committee about the challenges in the tax system, mentioning that most businesses in Pakistan are not registered for sales tax, with only 62,000 businesses currently registered. Despite this, a significant portion of the tax revenue is generated by those few businesses. Moreover, sales tax collected from consumers is not being properly remitted.
Senator Shibli Faraz raised concerns about the expected impact of investment in the FBR on tax growth. The Finance Minister responded by explaining that Pakistan’s current tax-to-GDP ratio stands at 10.3%. The goal is to increase this ratio to 13.5%, but to achieve this, the faulty processes must be corrected; otherwise, the result will be zero growth.