The number of tax filers for the current fiscal year has nearly doubled compared to last year, with around 723,000 new filers registered, Finance Minister Muhammad Aurangzeb said on Sunday.

At a press conference in Islamabad, alongside the chairman of the Federal Board of Revenue, Aurangzeb stated the government’s commitment to these initiatives. “We are walking the talk,” he stated, highlighting the government’s determination to improve tax compliance.

This increase follows Prime Minister Shehbaz Sharif’s approval on September 20 of significant measures aimed at enhancing tax enforcement and compliance, including a prohibition on banking and financial transactions for individuals who do not file tax returns.

The finance minister noted that the FBR chairman had submitted a report to the prime minister regarding non-filers and underfilers, revealing an estimated tax evasion of Rs1.3 trillion among individuals who underreport their income.

“We must declare war on cash in this country,” he asserted, adding that participation in the G20 will only be possible if the economy becomes more documented and transparent.

Aurangzeb stated that with an estimated Rs9 trillion in cash circulation and an FBR budget of Rs9.3 trillion, the actual size of Pakistan’s economy exceeds $700 billion.

While addressing the issue of non-filers, Aurangzeb warned that individuals who do not comply with tax regulations will face significant hurdles, including restrictions on purchasing vehicles, properties, and mutual funds, as well as difficulties in opening current bank accounts and withdrawing or depositing cash.

For those who underreport their income, the government plans to minimise human intervention by implementing a digital interface. Using digital algorithms, the government will assess discrepancies between declared income and actual asset values.

These measures are designed to protect citizens’ rights and prevent tax collectors from harassing individuals. Aurangzeb noted that the necessary data has always been available, stating, “There has always been lifestyle data on how many cars and houses I have and how many foreign trips I take in a year.”

He emphasized that the initiative aims to ensure the effective use of this data to improve the tax-to-GDP ratio in the country.

Exchange, interest rates to remain as per govt expectations, says Aurangzeb

Aurangzeb announced significant progress in Pakistan’s economy, highlighting the successful completion of the IMF Standby Agreement and a substantial increase in exports.

He stated that macroeconomic stability is not a destination but a journey, emphasizing the government’s ongoing efforts to strengthen the national economy.

Aurangzeb reported a 29% increase in exports, driven largely by growth in the IT sector. He attributed this success, along with improvements in foreign exchange reserves and a decrease in inflation to single digits, to the Prime Minister’s leadership and the successful implementation of government policies.

He also praised the role of the caretaker government in securing the IMF program.

Read more: IMF disburses first tranche of $1b in Pakistan’s bailout package

The Minister highlighted the timely repayment of a $2 billion debt in June and a reduction in the policy rate to 4.5%. He linked the decrease in inflation to the lower policy rate. He also noted positive developments in the Pakistan Stock Exchange and increased foreign direct investment. Aurangzeb emphasized that investor confidence is a major achievement reflecting the strengthening economy.

Addressing concerns about tax collection, Aurangzeb stated that the number of tax filers has doubled compared to last year, reaching 3.2 million from 1.6 million. He further announced that 723,000 new filers joined the tax net this year, adding that non-filers will be restricted from purchasing vehicles and property.

He also revealed plans to streamline the Federal Board of Revenue (FBR) and emphasized the need for reforms within the organization. To improve efficiency, six ministries will be abolished, two merged, and further reforms will be implemented in government institutions.

Aurangzeb concluded by expressing optimism about the future, stating his belief that the exchange rate and policy rate will remain in line with expectations. He stressed the importance of private sector leadership and the government’s intention to engage international experts to further improve the country’s economic standing.