Islamabad: Pakistan's Finance Minister, Muhammad Aurangzeb, urged traders on Tuesday to fulfill their tax obligations to help boost the country's revenue and stabilise its fragile economy over the long term.
Aurangzeb made this appeal during a press conference in Islamabad, following a nationwide strike by traders protesting against the newly introduced tax scheme aimed at bringing over 3.5 million retailers into the tax net.
The traders have rejected the Federal Board of Revenue’s (FBR) Tajir Dost Scheme, which imposes a fixed tax on traders and wholesalers. Despite the resistance, Aurangzeb emphasised the necessity of increasing tax revenue, which rose by 29 percent last year but still stands at a low 8.8 percent of GDP.
"This level of tax-to-GDP ratio is unsustainable," Aurangzeb said. "We need to increase it to 15 percent for economic stability."
As per reports, he further highlighted the disproportionate burden on the salaried class and manufacturing sector, stressing that all sectors, including wholesalers, distributors, and retailers, must contribute their fair share to the economy.
Aurangzeb also noted recent positive developments, such as a reduction in inflation to single digits in August and the potential for the State Bank of Pakistan to lower policy rates in response. Additionally, he mentioned the improvements in Pakistan’s credit ratings by global agencies Fitch and Moody’s, along with stable remittances, which reflect the confidence of overseas Pakistanis in the government's economic management.
The minister emphasized the importance of achieving macroeconomic stability as a foundation for sustainable growth, urging traders to cooperate with the new tax scheme. The government is facing significant challenges in persuading the retail sector to register under the scheme, with traders resisting through protests, a situation that has previously hindered similar efforts by past governments.
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