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Thursday, June 13, 2024  
06 Dhul-Hijjah 1445  

‘No turning back’: Finance Minister Aurangzeb vows to broaden tax base

‘We [I and Dar Sb] are absolutely on the same wavelength that there is no such thing as strategic SOE’
A still from the Pre-Budget Conference in Lahore shows Finance Minister Muhammad Aurangzeb delivering a speech on May 12, 2024. Screengrab via Aaj News
A still from the Pre-Budget Conference in Lahore shows Finance Minister Muhammad Aurangzeb delivering a speech on May 12, 2024. Screengrab via Aaj News
A still from the Pre-Budget Conference shows Finance Minister Muhammad Aurangzeb speaking during a panel discussion on May 12, 2024. Screengrab via Aaj News
A still from the Pre-Budget Conference shows Finance Minister Muhammad Aurangzeb speaking during a panel discussion on May 12, 2024. Screengrab via Aaj News

Finance Minister Muhammad Aurangzeb vowed on Sunday to broaden the tax base by digitising the tax collection authority, stressing that Pakistan cannot take back the steps taken to increase the taxpayers in the country.

“We don’t have to turn back. Let me be very clear, we are not going back on this. We will provide every facility and have dialogue, but we cannot go back because our hands have been forced,” he said during a panel discussion at the Pre-Budget Conference held in collocation with Business Recorder and the Federation of Pakistan Chambers of Commerce & Industry in Lahore.

His statement comes as Prime Minister Shehbaz Sharif formed a committee to address the issues hindering the implementation of the Tajir Dost Scheme. The committee comprises the Federal Board of Revenue chairman, the finance secretary, and the commerce ministry secretary.

As of April 30, only 75 retailers and shopkeepers have been registered under the scheme, according to the Business Recorder.

“If we did not do these structural changes, then we will have to go for the 25th programme,” Aurangzeb said while speaking about bringing retailers, shopkeepers, and traders to the tax net and documenting the undocumented economy.

About the undocumented economy, he said that around Rs8 to Rs10 trillion of the amount was in circulation while the revenue budget was Rs9.4 trillion.

“There has to be a war on cash,” he said and added that the size of Pakistan’s economy was more than $350 million was more than double than this if the informal economy was brought into the formal side.

The finance czar acknowledged that many people fear that they would be harassed after coming into the tax net. He stressed the need for dealing with the trust deficit.

Aurangzeb received the participants’ applause when he called for reviewing the interest rate regime amid the declining inflation rates, saying that the industry cannot work on 25% to 26% rate.

He reiterated that digitisation was the only way forward. “We are going for an end-to-end digitisation to work on the design and the implementation,” he said and added that there would be transparency and improved client participation when the human intervention would be less.

Last month, Pakistan signed an agreement with McKinsey and Company to help the country with end-to-end digitisation of the tax authority.

According to Aurangzeb, the Track and Trace system was a “tremendous failure” as it lacked implementation and did not have operational effectiveness. “So, whoever says that the FBR imposes the Track and Trace, it is wrong.”

‘We [I and Dar Sb] are absolutely on the same wavelength’

In his speech, Aurangzeb said the country would formally start its talks with the IMF tomorrow (Monday) in Islamabad.

He reiterated that the programme was longer and bigger because the country needed permanence.

The government was working on three areas: tax to GDP ratio, energy, and reforms related to the state-owned enterprises (SOEs) and privatisation agenda.

“We need to have enforcement in laws, rules and regulation,” he said and added that the government was taking the Track and Trace system forward. “We have to stop these leakages.”

He called for bringing tax and un-tax sectors “into the picture”.

While speaking about the energy reforms, he said that leakage was a “euphemism for theft” and the government has to stop that.

“We are changing the boards and bringing private sector people,” he said and added that announcements would be made in the next seven to 10 days.

“Dar Sb chaired the Cabinet Committee on Privatisation (CCoP) meeting on Friday. We [I and Dar Sb] are absolutely on the same wavelength that there is no such thing as strategic SOE,” Aurangzeb said and added that the government would accelerate the privatisation agenda.

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The finance minister added that a meeting would be held on Monday where “we will go back to various ministries and say that all this should be handed over to the private sector”.

“There will be public-private partnership and we will accelerate the privatisation agenda,” he said.

He added that local investors were bidding for the Pakistan International Airlines and the Islamabad International Airport. “I hope they will take it forward with foreign operators.”

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economy

Finance minister

FBR

Muhammad Aurangzeb