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Pakistan’s tax chief said on Tuesday that 95% households would not be affected by the proposed legislation to ban economic transactions of “ineligible” people and businesses rather these measures would help increase tax collection by another Rs5 trillion in five years.

Pakistan is a poor country and 90 to 95% people do not fall in the tax ambit, said Rashid Langrial, the chairman of the Federal Board of Revenue (FBR), while briefing the Senate Standing Committee on Finance on the new tax bill.

Finance Minister Muhammad Aurangzeb also admitted that people were not having trust in the FBR. “Restoring credibility and trust of the taxpayers with the tax authority is critical, as people come to me and say that they would pay more money but will not come in the tax net,” he said.

No treasury member attended the meeting and proceedings were held thanks to the presence of two legislators of the Pakistan Tehreek-e-Insaf (PTI) – Senator Shibli Faraz and Senator Mohsin Aziz. The Pakistan Peoples Party’s (PPP) Senator Saleem Mandviwalla chaired the meeting.

FBR Chairman Rashid Langrial, while responding to a question raised by the Leader of the Opposition in the Senate, Senator Shibli Faraz, told the committee that 95% households would not be affected by the new legislation.

In four to five years, he added, these enforcement and regulation measures would help the FBR collect additional Rs5 trillion. Langrial said that as against the current level of 10%, the FBR’s tax-to-GDP ratio potential was 14%.

The government last week introduced the Tax Laws Amendment Bill 2024 in the National Assembly to ban purchase of cars, properties or own bank accounts by ineligible persons. The bill also seeks the powers to freeze bank accounts and confiscate businesses and properties of sales tax unregistered persons.