ISLAMABAD: Finance Minister Muhammad Aurangzeb Thursday said the enforcement will be done in a big way against informal sectors and those undocumented sectors contributing nothing to the national exchequer.
Addressing PRBC Conference 2025 (Retail Re-imagined: Innovate, Collaborate and Thrive) organised by Pakistan Retail Business Council (PRBC) here, the Finance Minister referred to tobacco and beverage sectors where formal sectors are paying all taxes as compared to nothing by informal sectors.
He noted that the disproportionate tax burden on the salaried class is not sustainable, stressing that other sectors, such as retail, wholesale, real estate and agriculture, will have to step up and contribute their fair share in taxes.
Aurangzeb hints at tax reforms for Pakistan’s salaried group
He said that the manufacturing sector, services sector and salaried class are over-burdened with taxes and this model is not sustainable.
The un-documented sectors have to contribute their share in taxes in the national kitty. “We will do enforcement in a big way and documentation will be done through digitisation,” he said. He stated that the contribution of retail sector in GDP is 19 percent, but their share in taxes is only one percent.
He said the government has been engaging with the retail sector, requesting them to formalise their businesses and pay their due share of taxes. For national interest, “we cannot afford to have people taking a free ride anymore,” adding documentation was key to achieving this goal.
He referred to a new SRO issued by the Federal Board of Revenue (FBR) imposing limits on submission/uploading of manual sales tax invoices.
The comparison of formal verses informal sectors revealed that where people in formal sector paying more taxes and subsidizing those who are free riders. There is around 9.4 trillion cash in circulation which needed to be brought into the formal economy, but this could not be done overnight.
However, the government was determined to move in the right direction. Muhammad Aurangzeb further emphasised structural reforms to avoid boom and bust cycles and move towards sustainable and inclusive growth.
He said these structural reforms are already underway in areas such as taxation, energy, state-owned enterprises (SOEs), and public finance. He expressed satisfaction that the country is heading in the right economic direction with macroeconomic stability achieved.
On the taxation side, the Finance Minister mentioned that a real transformation is under way with a focus on utilising latest technology to bring transparency and check leakages. He emphasised that it is also important to restore trust and credibility in the tax authority.
In a population of 240 million and keeping in view scale of the economy, we cannot afford that people are not ready to deal with the tax authority of the country.
On the energy side, Aurangzeb stated that tough measures are being implemented to move towards competitive energy.
Regarding SOEs reforms, he mentioned that the process has already started, and the rightsizing process will be completed by June this year. He also affirmed that the privatisation process will be taken forward. “The PIA is getting to be relaunched and we are very determined to take it forward,” he said.
The minister said, Pakistan was actively engaged with international rating agencies, with a clear goal in sight to upgrade its credit rating to “Single B” category.
He said the country has already made significant strides in this direction, with a notable upgrade in the last calendar year. Building on this momentum, Pakistan is hopeful of securing a further upgrade, which would have far-reaching implications for its economic prospects.
Copyright Business Recorder, 2025
Comments