ByIslamabad, Pakistan: In a startling revelation, the Federal Board of Revenue (FBR) Chairman, Rashid Mahmood Langrial, disclosed that the top 5% of earners in Pakistan have evaded a staggering Rs1.6 trillion in taxes. This information was shared during a press conference alongside Finance Minister Senator Muhammad Aurangzeb and Minister of State for Finance and Revenue Ali Pervaiz Malik.
Tax Gap and Evasion:
Langrial stated that the government’s tax gap for the current fiscal year is estimated at Rs7.1 trillion, a significant increase from Rs6.2 trillion last year. He highlighted that the top 5% of earners, comprising approximately 3.3 million individuals, are primarily responsible for this gap. While only 0.6 million from this group file tax returns, the remaining 2.7 million evade their tax obligations, contributing to the massive tax liability.
Government’s Initiatives:
Finance Minister Aurangzeb emphasized the government’s commitment to tax reforms, stating that the recently introduced Tax Amendment Bill aims to enhance tax compliance. He also highlighted the government’s focus on digitization, with the execution phase of a comprehensive digitization plan now underway.
Focus on Increasing Tax-to-GDP Ratio:
The government aims to increase the tax-to-GDP ratio to at least 13%, which is considered essential for sustainable fiscal health. Acknowledging the current revenue shortfall, Aurangzeb stated that the government is making every effort to achieve the revenue targets.
Key Takeaways:
- The significant tax evasion by the top 5% of earners highlights a major challenge for the government in achieving its revenue targets.
- The government is focused on implementing tax reforms, enhancing tax compliance, and increasing the tax-to-GDP ratio.
- Digitization efforts are underway to modernize the FBR and improve tax administration.
- The government is committed to addressing concerns raised by international agencies regarding human rights and the rule of law.
