ISLAMABAD: Finance Minister Muhammad Aurangzeb has called for collective efforts across all sectors to boost the tax-to-GDP ratio in the face of growing resistance to tax reforms from traders. Speaking on Tuesday, Aurangzeb emphasized the importance of expanding the tax base to ensure economic sustainability.
The Federal Board of Revenue’s (FBR) Tajir Dost Scheme, designed to integrate traders and wholesalers into the formal tax system, has sparked multiple strikes by traders and retailers nationwide. The scheme has faced staunch opposition from various trade bodies since its introduction.
During a press conference in Islamabad, Aurangzeb highlighted the critical need to broaden the tax net, noting that the country’s current tax-to-GDP ratio of 8.8% is unsustainable. “We are clear on the need to advance these reforms,” he stated, pointing out that while tax revenue increased by 29% last year, the ratio remains insufficient for long-term stability. “We must aim to raise this to 15%.”
The finance minister urged the Federal Board of Revenue to ensure stringent implementation and execution of tax policies, calling on all sectors to contribute their fair share. He underscored that the burden currently falls disproportionately on the salaried class and the manufacturing industry, a situation that cannot persist.
“How long can we continue running the country like this?” Aurangzeb questioned, appealing directly to wholesalers, distributors, and retailers to step up and support the national economy.
Aurangzeb also touched on the recent reduction in inflation, which dipped into single digits in August, predicting that the State Bank of Pakistan’s policy rate would likely decrease in response. He expressed optimism that this would stimulate the industrial sector, providing a much-needed boost to the economy.
In other remarks, the finance minister noted the positive developments in Pakistan’s global credit ratings. Fitch and Moody’s have both upgraded the country’s ratings by one notch. Specifically, Moody’s recently elevated Pakistan’s local and foreign currency issuer and senior unsecured debt ratings from Caa3 to Caa2, citing improvements in macroeconomic conditions and better government liquidity and external positions.
Aurangzeb viewed this upgrade as external validation of the country’s economic trajectory. “As the prime minister has said, we have a long way to go, but the key is that we are moving in the right direction towards a sustainable economy,” he concluded.
