Islamabad, March 6, 2024 – Prime Minister Shehbaz Sharif, in a high-level meeting on the restructuring of the Federal Board of Revenue (FBR), directed authorities to expedite the resolution of legal disputes obstructing the recovery of Rs 1.7 trillion in stuck-up taxes.
The prime minister emphasized the need for comprehensive reforms to modernize the revenue and tax system, aiming for a robust economic growth of six to seven percent.
During the meeting, PM Shehbaz instructed the Ministry of Law to propose the establishment of a legal department within the FBR. This department would focus on drafting legal documents and securing the services of lawyers to streamline legal processes hindering tax recovery. The prime minister highlighted the importance of incentivizing businesses and reducing the tax burden while encouraging the business community to contribute to social progress.
“We want to bring a system of taxation based on incentives. We desire to reduce the burden of taxes, but the business community has to help by playing a role for the progress of people through social service,” stated Prime Minister Shehbaz Sharif.
He stressed the urgency of implementing an effective third-party audit system, emphasizing that the existing system needed improvement. PM Shehbaz also called for a thorough review of all tax exemptions, emphasizing the need to promote small and medium enterprises (SMEs) to prevent Pakistan from falling behind in the global arena.
“We could not promote our small and medium industry in the last 40 years. Now is the time to expand this sector,” added the prime minister.
In the meeting, participants delved into proposals for enhancing transparency within the FBR system, adopting international infrastructure standards, providing tax incentives for increased revenue, combating corruption and smuggling, separating inland revenue and customs departments, and reducing tax rates. Prime Minister Shehbaz stressed the importance of implementing the proposed roadmap within clear timelines, setting realistic targets and ensuring swift reforms.
Former caretaker minister for finance, Dr. Shamshad Akhtar, provided a detailed briefing on the restructuring of FBR, automation, and identified loopholes in tax collection. Dr. Akhtar underscored the necessity of increasing Pakistan’s tax-to-GDP ratio, which currently stands at 9.5 percent. She highlighted that 55.6 percent of the population did not pay any taxes, with only 3.3 percent contributing. Dr. Akhtar suggested a long-term tax plan prepared by the Federal Policy Board for policy continuity.
The prime minister welcomed Dr. Shamshad Akhtar, acknowledging her efforts and recognizing the foundation laid by Senator Ishaq Dar with the International Monetary Fund (IMF) that enabled subsequent progress. Senators Ishaq Dar and Musadiq Malik, along with other high-ranking officials, attended the meeting, which included the participation of prominent banker Muhammad Aurangzeb via video link. The prime minister emphasized the need for swift action, stating, “we do not have time to waste as it is a matter of the shining future of Pakistan and economic recovery.”
