Reiterating the pressing need for reforms and broadening of the tax base, Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb asserted here on Thursday that below 10% tax to GDP ratio was not sustainable.
“We have to take it up to 13% in the next three years gradually,” the minister said while addressing the post-budget press conference.
He said that no country could sustain at 9.5% tax to GDP ratio base without external assistance adding as per the international benchmarks. Hence, there is a dire need to enhance tax to GDP ratio.
He also underscored the importance of doing away with the undocumented economy with end-to-end digitisation to reduce human intervention as much as possible make the tax mechanism transparent and mitigate chances of corruption.
The minister admitted that the Federal Board of Revenue (FBR) could not do compliance and enforcement to the extent it should have done.
He said the government had introduced progressive taxes in the federal budget for the upcoming fiscal year 2024-25 to tax more those having high income.
He said the country needed to move in the direction of broadening the tax base to make the economy sustainable therefore, it was imperative to bring into the tax net the retailers and wholesalers to share the burden.
The minister said the government had launched a tax scheme for retailers and wholesalers and they were offered registration on a volunteer basis, however, it was termed unsuccessful as of April 2024.
In May, he added, the FBR workforce mobilised itself and as of now, around 31,000 retailers had registered themselves with the scheme.
He said, the registration would continue and tax would also be imposed from July 2024. “We have no other option but to get this sector into tax net,” he remarked.
The minister said that the Point of Sale (PoS) scheme would be re-launched to do away with cash transactions.
To a question about the Petroleum Development Levy (PDL), he said it would be increased gradually and in accordance with international oil prices.
The minister said that the exemption and 35% category of salary slabs were intact, adding that there was a change in other slabs falling between.
The government took up tax for non-salaried personals up to 45%, he added.
Talking about youth development, the minister said Pakistan was having third third-largest freelancer population in the world.
Hence, keeping in view this reality, the government has provided record allocations for the Information and Technology sector to improve digital infrastructure and provide the youth with an enabling environment.
He said the country’s IT exports stood at $ 3.5 billion which could be lifted to $7 billion provided an enabling environment was given to youth.
He admitted that proper financing was not provided to SMEs because banks had no appetite for them and assured that banks would now come up with specific schemes, in three sectors including agriculture, IT and SMEs.
Talking about PSDP priorities, the minister said that the government had focused on completing ongoing projects therefore 81% of allocations were made for these schemes while only 19% was allocated for new schemes, which included important projects and those had foreign funding.
