During a meeting of a committee constituted by the Pakistani Prime Minister to find avenues for revenue mobilization, Mian Muhammad Mansha, one of Pakistan’s wealthiest individuals, recommended that the government tax the real estate and retail sectors.
Mansha and fellow committee member Mohammad Ali Tabba stated that these sectors had received preferential treatment at the expense of industrialists and the salaried class, and that the government should not put further tax burdens on already heavily taxed sectors. The committee requested that the private members provide written recommendations and Mansha and Tabba suggested increasing the share of services in tax collection by taking provinces on board.
The PML-N government has had a soft spot for traders who support it, and it imposed a fixed tax on retailers in the budget which was later withdrawn. Mansha and Tabba encouraged the government to tax the real estate sector and ensure that it operates through banking channels. The committee’s terms of reference were noted to clash with the Reforms and Revenue Mobilisation Commission, which is already working on a plan to expand the narrow tax base. The FBR has been struggling to expand the tax base and has been heavily focused on those who are already paying taxes. The tax collection target has been raised to Rs7.640 trillion after the imposition of a mini-budget, but even if the target is met, the tax-to-GDP ratio will remain low at 9%. Despite enforcing the mini-budget and currency devaluation, the FBR could not narrow the tax shortfall, which was in relation to the old annual tax target of Rs7.470 trillion. Sales tax has been the weakest area for the FBR, and the salaried class has been made to suffer due to the preferential treatment meted out to the retailers and real estate sector.