Govt to abolish category of non-filers, finance minister affirms

Finance Minister Muhammad Aurangzeb has said the government is going to abolish the category of non-filers from the tax laws to increase its revenue while reducing burden on existing filers.

“It’s about time to remove this category of non-filers,” the finance minister said in an interview to Voice of America on the sidelines of his visit to New York, USA.

“Pakistan is probably the only country in the world where there is this term of non-filers. Either you are a filer or you simply are not paying taxes,” he added.

“The government is going to abolish this category.”

Non-filers must be brought into the tax net: PM

The finance czar explained that the government “cannot turn the face other way” after taking a certain amount from non-filers.

“The government cannot afford this anymore,” he urged.

The development comes after the Federal Board of Revenue (FBR) Chairman Rashid Mahmood was quoted as saying in multiple reports on Wednesday that the government had decided to abolish the category of non-filers.

During the same day, FBR Member Inland Revenue (Policy) Dr Hamid Ateeq Sarwar informed the Senate Standing Committee on Finance that the prime minister had only approved enforcement measures against non-filers and restrictions on non-filers, nil-filers or filers, involved in massive under-declarations or mis-declarations in returns.

The FBR member said the number of return filers for tax year 2023 reached 6 million and the government was expecting more returns after the exercise against non-filers of income tax returns.

He disclosed that 2.5 million persons had filed zero-income returns.

The computer system would not allow financial transactions of zero-income till they explained their source of income or earnings etc, according to Sarwar.

In his interview, the finance minister also said restrictions would be imposed on those who do not pay taxes, making it difficult for them to undertake a number of activities

He said the government has data about people’s lifestyles, which includes information on how many cars people own, their foreign trips, and other expenses.

Non-filers, tax evaders: Data sharing among key stakeholders under way: McKinsey

The minister said based on the data, the FBR would bring non-taxpayers into the tax net without detaining them.

“When I was a banker, people would come to me and say the parallel economy of Rs9 trillion cash in circulation is running the country.

“However, the country needs to move forward with a documented economy and bringing the undocumented economy into the tax net will automatically double Pakistan’s current economy of around $330 billion,” Aurangzeb said.

He said additional burden placed on the salaried and manufacturing classes would be reduced, and retailers, wholesalers, agriculture sector, and property sector must be brought into the tax net.

“There will be transitional pain, but this is important to run the country in the right direction,” the finance minister emphasised.

‘No delay in IMF bailout programme’

Answering a question, the finance minister said there was no delay in the International Monetary Fund (IMF) programme and completion of the 9-month Stand-By Arrangement (SBA) had brought the country in a good position to discuss a new programme with the IMF, which was followed by the signing of the staff-level agreement in July.

However, Aurangzeb mentioned that the failure of implementing structural benchmarks such as increasing tax-to-GDP ratio, energy reforms, SOE reforms, and privatisation programme, which had been agreed with the IMF in the previous programmes caused a “deficit of credibility and trust”.

“This time we are very determined that we are going through this reform agenda,” he said.