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Finance Minister Muhammad Aurangzeb on Thursday expressed his aim to increase the tax-to-GDP ratio to 13 per cent in the next three years, from the current one of more than 9pc.
Addressing a post-budget press briefing in Islamabad, Aurangzeb said: “Our basic principles while framing this budget are to expand the tax base. This sub-10pc tax-to-GDP ratio is simply not sustainable.
“We have to [increase it] every year so that in the next three years, we can take it to 13pc,” he asserted, asking if any other country in the world was sustaining itself with a tax-to-GDP ratio of less than 10pc, like Pakistan was.
During the briefing, the finance minister responded to several queries of journalists regarding the federal budget proposed a day ago for the upcoming fiscal year.
On Wednesday, Aurangzeb presented his first federal budget with a total outlay of Rs18.9 trillion, which analysts said was broadly “in line with IMF guidelines”.
Pakistan’s budget for the upcoming year aims for a modest 3.6 per cent GDP growth, and sets an ambitious Rs13tr tax collection target, raising taxes on salaried classes and removing tax exemptions for the rest.
Aurangzeb, during the budget presentation, had said that the goal was to widen the tax base to avoid burdening existing taxpayers.
“This sub-10pc tax-to-GDP ratio is unsustainable,” he said. “We need to improve the ratio within three to four years. Name one country that is sustaining itself with a tax-GDP ratio under 10pc.”
“We aim to end the undocumented economy and digitise finances. Talk about the FBR’s performance is also warranted, since the compliance and enforcement was not up to par.
“End-to-end digitisation tends to reduce human intervention. Corruption will go down, there will be transparency and improved client service.”
The finance minister said that the salaried class should not be burdened with progressive income tax but added that non-filers would see an increase in “tax in transaction”.
“The point of our announcements is to deter non-filing,” he said. “I want to remove this concept of non-filers. I think Pakistan is the only country with non-filers.”
More to follow
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