Focus is on expanding tax base, declares finance minister

Federal Finance Minister Senator Muhammad Aurangzeb has said that the government is trying to expand the tax base in the country as “countries are run only on taxes”, reported 24NewsHD TV channel.

Addressing a news conference in his hometwon of Kamalia on Tuesday, Aurangzeb said “We are moving towards enforcement and compliance as laws are there but we somehow cannot enforce them.”

The finance minister GDP is depended on taxes and the authorities must have to enforce them. “We are going to introduce tax on retailers from July after registration of about 32,000 of them,” he added.

He said the national economy is moving on the right path and they were trying to bring more sectors to the tax net.

Responding to a question, the minister said the government was being assailed for not giving relief to the salaried class. “How can we give them relief when the institutions are making billions of rupees losses,” he added.

Aurangzeb made it crystal clear that everything would be handed over to the private sector if Pakistani really wanted to make progress. “You can run schools, universities and hospitals on charity money but not a country. Tax concessions will gradually be abolished,” he maintained.

Aurangzeb reiterated government’s commitment to reduce expenditures and boost revenues as part of a comprehensive effort to strengthen the country’s economy on sustainable grounds.

The minister said the federal government would shut down parallel ministries or departments that have been devolved to provinces. This move is expected to significantly reduce expenditure and improve efficiency, adding, the Prime Minister has already announced the closure of Pakistan Public Works Department, a move that will help reduce the financial burden on the government, he added.

Secondly, the government will privatize state-owned enterprises (SOEs), which have been a significant drain on the national exchequer. He cited the example of Pakistan International Airlines (PIA), which has a liability of 622 billion that has been transferred to the government. The privatization of SOEs will help reduce the financial burden on the government and improve efficiency.

The minister also announced that airport outsourcing is being completed, with Karachi Airport set to be handed over to the private sector by July or August this year, to be followed by Lahore Airport.

The government is committed to reducing losses and burdens on the federal government, and these measures are part of a larger effort to achieve this goal. He emphasized that the Prime Minister was personally leading the effort to reduce expenditures and improve efficiency.

On revenue side, Aurangzeb highlighted the need to increase the tax-to-GDP ratio from 9.5% to 13% over the next three years, stressing that taxes are essential for running the country. To achieve this goal, the government has announced revenue measures, including bringing the non-taxable sector into the tax base, gradually eliminating tax exemptions worth Rs3.9 trillion, and rephrasing policies in areas like health and agriculture.

He announced that 32,000 retailers have already been registered and will be taxed starting from July 2024, and emphasized the government’s commitment to bringing other sectors into the tax net.

The government is also focusing on compliance, plugging leakages in the system, and implementing an end-to-end digitization system to reduce human intervention, increase transparency, and end corruption. Sales tax automation is a top priority, he remarked.

He reiterated government’s commitment to develop the agricultural sector, saying Rs.41 billion have been earmarked the federal Public Sector Development Program (PSDP) to promote this sector adding government also intends to solarize tube wells, provide loans to small farmers, and develop warehouses to facilitate small farmers. He said, subsidies on fertilizer, seeds and agriculture would continue. He said, banks, including Islamic banks are being pursued to facilitate loans for farmers to help promote this sector.

The finance made it clear that the International Monetary Fund (IMF) has nothing to do with the country’s agriculture sector.

In the IT sector, the government aims to facilitate freelancers and increase exports from $3.5 billion to $7 billion. He said, a hefty amount has been earmarked in the budget to facilitate IT sector.

The minister assured that the Prime Minister’s recent visit to China was focused on technology transfer, industry development, and enhancing exports, rather than seeking aid.

Overall, the government’s plans aim to strengthen the country’s economy, reduce dependence on aid, and promote sustainable growth through taxes, compliance, and development in key sectors like agriculture and IT.