Federal Minister for Finance Muhammad Aurangzeb announced on Thursday that artificial intelligence will be used to increase tax collection, raising concerns over Pakistan’s disproportionate tax burden.
Speaking at a conference on “Retail Reimagined: Innovate, Collaborate & Thrive”, organised by The Pakistan Retail Business Council, the minister said that the country’s retail sector, which contributes a significant 19% to the country’s GDP, is paying a mere 1% in taxes, sparking concerns over the sector’s lack of contribution to the national exchequer.
He stressed that the disproportionate burden of taxes on the manufacturing, services industry, and salaried class is unsustainable.
“We need to bring other segments into the tax net, including agriculture, real estate, retail, and wholesale.
” He lauded provincial governments for taking measures towards this end by passing bills in their respective assemblies for imposing agricultural taxes.
He said the government has been engaging with the retail sector, requesting that they formalise their businesses and pay their due share of taxes.
For national interest, “we cannot afford to have people taking a free ride anymore,” adding documentation was key to achieving this goal.
Later, while speaking to the media, he announced that artificial intelligence would be utilised to increase tax collection.
The finance czar added that Rs9.4 trillion is in cash circulation, which needs to be brought into the formal economy. He acknowledged that this could not be done overnight, but the government was determined to move in the right direction.
The economy, the minister added, has taken a significant turn for the better, with macroeconomic stability firmly in place as currency has stabilised, foreign exchange reserves have increased, and inflation has receded. The policy rate has decreased significantly, leading Kibor to recede from 23% to around 11%.
These positive developments have not gone unnoticed, as foreign investors are once again recognizing Pakistan’s economic potential.
Institutional flows are returning to the country, with investments pouring in on the debt and equity sides.
The minister further said Pakistan was actively engaged with international rating agencies, with a clear goal of upgrading its credit rating to the “Single B” category.
A “Single B” rating would not only enhance Pakistan’s credibility in the eyes of international investors but also allow the country to diversify its funding base and regain access to national capital markets.
The minister said structural reforms in taxation, energy, state-owned enterprises, and public finance were underway.
A significant overhaul of the taxation system is underway, focusing on end-to-end digitisation to promote transparency, reduce leakage, and combat corruption.
Aurangzeb said that a team from the International Monetary Fund will visit Pakistan for four days next week to advance the discussion on a $1 billion fund for climate resilience.
“The next IMF mission is [scheduled for] 24th to 28th [February], which will be here to take the climate resiliency fund discussion forward,” Aurangzeb said in an informal talk with reporters in Islamabad.
