“Paying taxes is no longer a request; it is compulsory,” he stated. “Compliance and enforcement will be firm because the state can no longer afford to shoulder the burden alone or place it disproportionately on the salaried and manufacturing classes.”
The finance minister highlighted that certain sectors, traditionally outside the tax net, must now align with national fiscal priorities. Taxation will be enforced equitably, and defaulters should expect strict measures.
Aurangzeb noted that the reliance on a narrow tax base, particularly taxing salaried individuals and industries, had reached its limit. The government’s new strategy aims to broaden the tax net to include under-taxed or untaxed segments, addressing systemic fiscal imbalances.
Reforms Backed by IMF Support
Aurangzeb pointed to recent discussions with the International Monetary Fund (IMF), stating that the structural benchmarks agreed upon—centered on tax reforms—are critical for economic resilience. The IMF’s support underscores the need for systemic changes in taxation, energy, and state-owned enterprise management.
Reforms have already been set in motion, with provincial governments collaborating on public finance improvements, including enhancing local tax collections. The finance minister emphasized that these measures are pivotal to sustaining the nascent economic stability Pakistan has achieved.
Macroeconomic Gains Require Taxation Discipline
The minister outlined progress, citing a reduction in inflation from 38% to 7% and a policy rate cut from 22% to 15%. Foreign exchange reserves have also improved, now covering over two months of imports. However, he warned that these gains remain fragile without sustained fiscal discipline.
Aurangzeb called on stakeholders, including businesses and landowners, to move forward with clarity and responsibility. “Our collective future depends on every sector contributing fairly to the economy,” he remarked, adding that Pakistan’s aspiration to grow from a $300 billion to a $3 trillion economy hinges on fiscal equity and robust compliance.
This new taxation regime marks a turning point, with enforcement poised to bring historically exempt sectors into the fold, ensuring a more balanced fiscal structure for Pakistan.
