Islamabad, Feb 21: The International Monetary Fund (IMF) Resident Chief in Pakistan, Mahir Binici, has highlighted the country’s persistent economic struggles, attributing them to insufficient tax revenue generation. He emphasized that this shortfall places an undue burden on the formal sector, as several industries contribute minimally to the national exchequer, shifting the pressure onto the few that comply with taxation.
Speaking at a conference hosted by the Pakistan Retail Business Council (PRBC), Binici stressed the urgent need for comprehensive tax reforms. During the event, Finance Minister Muhammad Aurangzeb also pointed out that while the retail sector constitutes 19 percent of the nation’s GDP, it contributes a mere 1 percent in taxes. He underscored the necessity for agriculture, retail, wholesale, and real estate sectors to equitably share the tax burden, as the current tax structure is unsustainable.
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Aurangzeb further stated that the government is planning stringent measures to enforce taxation on informal and undocumented businesses. He reiterated that bringing these sectors into the tax net is crucial for stabilizing the economy and ensuring fair distribution of tax liabilities.
Additionally, the finance minister announced that an IMF delegation is set to visit Pakistan on February 24 to discuss the disbursement of $1-1.5 billion in climate financing. This funding is expected to support economic resilience and help Pakistan mitigate the financial impacts of climate-related challenges.
With the government’s commitment to broadening the tax base and enforcing compliance, these measures could play a pivotal role in improving fiscal sustainability and economic stability in Pakistan.
