ByPakistan’s Finance Minister, Senator Muhammad Aurangzeb, announced the continuation of tax exemptions for essential medical equipment, health services, and educational materials in the upcoming budget for 2024-25.
Key Exemptions Retained
- Medical: This includes equipment for surgeries, cardiology stents, and cardiology procedures.
- Education: School books, printing materials, and teacher research will continue to be exempt from taxes.
- Tribal Areas: Areas previously under the Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) will also maintain their tax breaks.
Focus on Tax Base Expansion
While announcing these exemptions, the Minister emphasized the government’s commitment to expanding the tax base. Here are some key points:
- Universal Tax Filing: The current distinction between filers and non-filers will be eliminated. Everyone will be required to file tax returns.
- Increased Tax Collection: The government aims to raise the tax-to-GDP ratio from 9.5% to 13%.
- Focus Areas: Stricter measures will target tax evasion in retail and real estate sectors.
Justification for Reforms
The Minister explained the need for these reforms by highlighting the importance of:
- Self-Reliance: A broader tax base is crucial to achieve self-reliance and potentially conclude the ongoing IMF program.
- Economic Growth: Increased revenue collection will support investments in key sectors like Information Technology and Agriculture.
Balancing Act
The budget appears to strike a balance between providing relief for essential goods and services while aiming to strengthen the country’s financial health through a wider tax net.
