As the government awaits the IMF’s position on a possible mini-budget, Minister of State for Finance Ali Pervaiz Malik said that tax notices would soon be issued to the wealthiest 5,000 non-filers, with an expected revenue gain of Rs7 billion.
According to media reports, this move follows a desk audit of transaction data for 200,000 non-filers, focusing on individuals with substantial assets, including multiple luxury cars, high credit card expenses, and bank profits exceeding Rs100 million.
Malik revealed that the estimated combined net worth of these 5,000 individuals is between Rs26 billion and Rs27 billion, with a potential tax contribution of Rs1.4 million per person. Despite years of efforts to expand the tax net, significant progress has been elusive, placing a growing burden on salaried citizens and the industrial sector, Malik noted.
Malik also highlighted the IMF’s pending response on whether a mini-budget is necessary, following Pakistan’s Rs190 billion tax shortfall in the fiscal year’s first four months.
As part of a $7 billion IMF program, Pakistan pledged to enact additional taxes if monthly shortfalls exceed 1% of targets, a threshold already surpassed. The FBR is actively working to explain this shortfall, attributing it to economic assumptions that missed the mark.
The minister further addressed the longstanding tax evasion in the tobacco sector, which holds a tax potential of Rs600 billion. Annually, Rs250 billion is lost due to illicit cigarette sales. While the FBR has implemented track-and-trace systems to curb this, a recent IPOR study reveals limited compliance. Of 264 surveyed cigarette brands across Punjab and Sindh, only 19 adhered fully to the legal standards, while 58% of the market remained non-compliant, consisting of untaxed local and smuggled brands.
The IPOR report highlighted that while the track-and-trace system became mandatory for tobacco, cement, fertilizer, and sugar in 2021, enforcement has been weak. Despite a legal requirement for tax stamps, many brands continue to operate without them, selling below the minimum price and bypassing health warnings.
The report recommended stricter enforcement at retail levels, increased penalties, and awareness campaigns to reduce the circulation of non-compliant products.
