Pakistan’s Finance Minister, Muhammad Aurangzeb, called on the country’s traders to pay their share of taxes to boost revenue collection and help stabilize the economy in the long run. Speaking at a press conference in Islamabad on Tuesday, Aurangzeb emphasized the need for broader tax compliance, especially in light of the country’s ongoing economic challenges.
The appeal comes days after traders across Pakistan organized a nationwide strike in protest of the new tax scheme introduced by the Federal Board of Revenue (FBR). The Tajir Dost Scheme, aimed at bringing over 3.5 million retailers into the tax net, imposes a fixed tax on traders and wholesalers. However, many traders have rejected the scheme, arguing that it unfairly burdens them.
Aurangzeb pointed out that while Pakistan increased its tax revenue by 29% last year, the tax-to-GDP ratio remains at just 8.8%. He stressed that this level is unsustainable, noting that “no country is sustainable at this level.” The minister highlighted the need to raise the tax-to-GDP ratio to 15% to achieve long-term economic stability.
Addressing traders directly, Aurangzeb said, “My wholesalers, distributors, retailers – my brothers and sisters – I am requesting once again, please take a step forward to contribute to the country’s economy.” He underscored that the current situation, where the salaried class and the manufacturing sector bear most of the tax burden, cannot continue.
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Economic Progress Amid Challenges
Despite the resistance from traders, Aurangzeb noted some positive economic developments. He highlighted that inflation had been reduced to single digits in August and expressed optimism that the State Bank of Pakistan would soon lower its policy rate, easing financial pressures further.
The minister also pointed to improvements in remittances and Pakistan’s global credit ratings. He mentioned that both Fitch and Moody’s, two major credit rating agencies, had upgraded Pakistan’s credit rating by one notch, signaling growing confidence in the country’s economic management. “Macroeconomic stability is the basic hygiene that we must get right,” Aurangzeb said, emphasizing its importance for sustained growth.
Government’s Challenge Ahead
The press conference highlighted the government’s ongoing struggle to bring the retail sector into the tax net. Previous attempts by different administrations to achieve this have failed, and the resistance from traders remains a significant hurdle. The government now faces the task of convincing the business community to accept the new tax scheme as part of broader efforts to stabilize the cash-strapped nation’s economy.
