Finance Minister Muhammad Aurangzeb on Tuesday slammed the ongoing resistance of traders against entering the tax net, stressing that all sectors must pay their due share to boost the tax-to-GDP ratio and achieve economic sustainability in Pakistan.
Last week, traders—supported by some opposition parties—protested nationwide against the Federal Board of Revenue (FBR)’s Tajir Dost Scheme, aimed at bringing traders and wholesalers into the formal tax system. The daylong strike was followed by negotiations between the FBR and traders’ representatives, which are ongoing, but the absence of any significant progress has triggered warnings from traders that they could return to the streets in future.
In a press statement, Aurangzeb stressed the initiative would not be rolled back. “One thing I want to be very clear … This is not going to be taken back,” he said in a televised statement. Summarizing the urgent need to broaden the tax net, he stressed that the prevailing tax-to-GDP ratio of 8.8% was unsustainable. “We are clear on the need to advance these reforms,” he said, reiterating that the ratio must be brought up to 15%.
Calling on the FBR to ensure the strict implementation and execution of tax policies, he urged all segments of society to contribute their due share, lamenting that otherwise the burden would fall on the salaried class and the manufacturing industry, which are already facing heavy taxes. “How long can we continue running the country like this?” he questioned.
In his statement, the finance minister also referred to the August inflation of 9.5%, hoping that this would lead to the State Bank of Pakistan (SBP) reducing the policy rate, which would boost industry and facilitate economic growth. He said the country’s economic policies were paying off through recent upgrades to its credit ratings by Fitch and Moody’s. “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 said.
Referring to the pending approval of the global lender’s Executive Board for a Staff-Level Agreement inked between Pakistan and the International Monetary Fund (IMF), he maintained that the process was in the “advanced” stages. He reiterated Prime Minister Shehbaz Sharif’s hope that this would prove the country’s last IMF bailout, but stressed this was reliant on structural reforms and the country becoming self-sufficient.