Tax returns have doubled during the current fiscal year: Finance Minister – Pakistan

Finance Minister Muhammad Aurangzeb said on Sunday that the number of tax returns for the current fiscal year has almost doubled compared to last year, stating that around 723,000 new filers have registered.

On September 20, Prime Minister Shehbaz Sharif approved drastic tax enforcement and compliance measures, including a ban on all banking and financial transactions for non-filers of tax returns.

“I think it is important that we as a government speak up,” he said at a press conference in Islamabad along with the chairman of the Federal Board of Revenue (FBR).

“This also shows our resolve as we move forward.”

The Finance Minister said that the FBR Chairman had presented a report to the Prime Minister on non-filers and sub-filers. On this, he stated that the estimated tax evasion by under-filers was Rs1.3 trillion.

“I think I’ve already talked about how we need to declare war on cash in this country,” he said. “When we talk about (going) into the G20, we will only go into the G20 if all this happens in the documented economy.”

He said that since the estimated amount for cash in circulation was about Rs9 trillion and the FBR budget was Rs9.3 trillion, it could be estimated that the actual size of the country’s economy was more than $700 billion.

As for the non-filers, the Finance Minister stressed that “in the future they will not be able to buy vehicles, properties, investment funds and current bank accounts – they will have problems withdrawing and depositing cash”.

For under filers, he emphasized that the government will reduce human intervention by creating a digital interface. Through a digital algorithm, he said, the government will measure the difference between what people declared and the actual value of their assets.

He added that such measures are important for citizens’ rights so that tax collectors would not “harass” them.

“Look, this data was always there with us,” he said. “With me there was always a lifestyle (data) about how many cars (and) houses I have and how many foreign trips I make in a year.”

“All we are doing now, ladies and gentlemen, is making sure that we use this data in the right way to increase our tax rate,” he stressed.

Turning to inflation and its downward trajectory, he said it is in single digits and “will start to fall more”, adding that this happened thanks to the successful conclusion of the stand-by agreement with the International Monetary Fund (IMF ).

Aurangzeb noted that a new and expanded IMF program was crucial to make the country’s macroeconomic stability sustainable and implement structural reforms.

The IMF Board of Governors formally approved the $7 billion, 37-month Extended Fund Facility agreed in July – the 24th IMF disbursement since 1958 – in exchange for unpopular reforms including broadening the chronically low tax base .

The Prime Minister and the Minister of Finance have emphasized in the past that this will be the last IMF program that the country undertakes.

During today’s press conference, the Finance Minister reiterated this claim, stating that the need to achieve macroeconomic stability is crucial if we want to have this “as the last programme”.

“Because this is no longer a theory, we are seeing the results of this macroeconomic stability,” he said, adding that energy and privatization reforms were taking place.

Turning to rightsizing, which is headed by the Minister of Finance, he emphasized that six ministries are currently being ratified with the aim of reducing federal spending.

“And they have been endorsed by the Cabinet and the Prime Minister,” he added, “of the six, there is one ministry (Capital Authority) that is being abolished.”