FM warns against overreliance on salaried class amid untaxed sectors

September 30, 2024 (MLN): Pakistan’s government will need to continue tapping into its salaried class and manufacturing sector for tax revenue generation if untaxed or undertaxed sectors, especially retailers, wholesalers, and real estate, are not brought into the tax system.

This was stated by Finance Minister Muhammad Aurangzeb on Sunday, who emphasized that the country has no leverage for structural slippage.

During his speech, he urged for increased compliance and enforcement to eliminate corruption, noting that reforms cannot be enacted unless the economy is thoroughly documented.

He added that the country must declare a “nuclear war” against the cash-based economy as part of the reforms.

“We must control under-filing in a structured and professional manner,” the minister said.

He further went on to discuss the country’s recent achievement of securing the $7-billion Extended Fund Facility from the International Monetary Fund, which will further help steer the country toward stability.

However, the main hindrance here, according to the minister, was the lack of major reforms required across various sectors such as power.

To ensure that this is the last IMF program, he called for significant adjustments to economic standards.

Referring to the concerns of foreign investors regarding their unpaid dividends and profits in Pakistan, the Finance Minister that since the start of the ongoing fiscal year, all returns and dividend income of foreigners have been paid.

Regarding key rates in the economy, he discussed the decline in KIBOR and expressed hope that inflation will decelerate further to support additional rate cuts.

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