Islamabad, February 20, 2025 – Finance Minister Muhammad Aurangzeb has underscored the urgent need to bring the undocumented economy into the tax net, warning that Pakistan can no longer afford to sustain “free riders” who evade taxation.
Speaking at the “Retail Reimagined: Innovate, Collaborate & Thrive” conference, organized by the Pakistan Retail Business Council (PRBC), Aurangzeb emphasized that the current tax burden is unfairly distributed. He pointed out that the manufacturing sector, services industry, and salaried class are shouldering a disproportionate share of taxes, while key segments like agriculture, retail, wholesale, and real estate remain largely outside the tax system.
“We cannot keep going back to the same sectors for more revenue. The formal economy is subsidizing those who do not pay taxes, and this is simply not sustainable,” said Aurangzeb.
He asserted that Pakistan must document the parallel economy and ensure that every sector contributes its fair share. “This country cannot afford a situation where certain groups continue to operate outside the tax net while benefiting from public resources,” Aurangzeb reiterated.
Regarding the retail sector, Aurangzeb pointed out that while it contributes 19% to the national GDP, its tax contribution is a mere 1%. This discrepancy, he said, highlights the need for structural tax reforms.
Shifting focus to the macroeconomic landscape, Aurangzeb stated that key indicators have shown improvement, citing a decline in inflation, stability in currency, a reduction in the policy rate, and stronger foreign exchange reserves. He also revealed that Pakistan is in discussions with international credit rating agencies and expressed optimism that the country will regain a single B rating this year, facilitating access to international capital markets.
“We want to make Pakistan a ‘bankable brand’ again and put an end to the cycle of economic instability,” Aurangzeb affirmed. He stressed that this goal can only be achieved through sustainable and inclusive growth, driven by structural reforms in taxation, energy, state-owned enterprises (SOEs), and public finance.
Aurangzeb also highlighted efforts to restore trust and credibility in the Federal Board of Revenue (FBR), acknowledging that many taxpayers are reluctant to engage with tax authorities. “We must change this perception and build confidence in the system,” he said.
Addressing the government’s rightsizing plans, Aurangzeb confirmed that a comprehensive framework is ready for implementation. He credited Dr. Ishrat Hussain for his pivotal role in developing a strategic institutional reform framework during the previous government.
Discussing privatization efforts, Aurangzeb admitted that progress has faced hiccups, but reaffirmed the government’s commitment. “The privatization of PIA is set to be relaunched, and we are determined to move forward,” he concluded.
