Caretaker Finance Minister Shamshad Akhtar has directed Federal Board of Revenue to urgently prepare a roadmap to increase the dismally low tax to GDP ratio to nearly thirteen percent. In her maiden meeting on tax matters, she termed the four million tax return filers too little to be proud off. We commend caretaker Finance Minister for taking the bull by horns as it is only by enhancing our tax collection, we can achieve fiscal stability and promote equitable economic growth. The urgency of situation demands not only a strategic overhaul of tax collection system but also an understanding from citizens of critical role taxes play in shaping nation’s destiny. The pressing need to bolster tax collection cannot be overstated. The tax-to-GDP ratio of 8.5% recorded at the end of previous fiscal year is notably low for a country striving for development and progress. Shamshad Akhtar’s vision of raising the ratio to around 13% demonstrates a pragmatic approach to generate revenue necessary to fund essential public services, infrastructure projects, and social programmes. The aspiration for a tax-to-GDP ratio of 22% may seem ambitious, but it underscores the aspiration for a more robust and self-sufficient economy.
However, the task ahead is not without challenges. Achieving a 4% increase in the tax-to-GDP ratio, translating to approximately Rs4.2 trillion, requires a comprehensive strategy that extends beyond usual taxpaying sectors. The “sacred” sectors, such as agriculture, exports, real estate, and retailers, which have traditionally enjoyed exemptions and leniencies, must now be subject to fair and just taxation. While this may be a daunting prospect, it is extremely important to ensure that all segments of society contribute their share to national progress. Adapting to latest technology can help capture revenue from previously uncharted territories that will also go a long way in minimising the burden on honest taxpayers. Then it is also important that simplification of the procedure of filing returns be made part of the roadmap. Many people who pay their taxes could not file the returns because of complicated procedure. We will suggest that a one page return form be introduced for the salaried class.
