In a shocking revelation, it has come to light that Pakistan’s top 5% earners have accumulated a staggering Rs1.6 trillion in unpaid taxes.
The disclosure was made by Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial during a press conference on Thursday, accompanied by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb and Minister of State for Finance and Revenue Ali Pervaiz Malik.
Langrial highlighted that the government’s tax gap for the current fiscal year is projected to reach Rs7.1 trillion, compared to Rs6.2 trillion last year, with significant focus on the top 5% of earners.
According to Langrial, about 3.3 million individuals fall into the top 5% earning category. However, only 600,000 file their returns, leaving 2.7 million individuals either filing below the threshold or not filing at all. Their collective tax liability exceeds Rs1.6 trillion.
Langrial further pointed out that even when including all categories below the top 5%, the total unpaid tax liability does not surpass Rs140 billion.
Finance Minister Aurangzeb emphasized that tax reforms are a key part of the government’s structural reform agenda, with recent amendments in the tax bill aimed at improving compliance.
Discussing digitization efforts, he shared that the government has entered the execution phase after the Prime Minister approved the design phase in September. He assured that efforts are focused not just on increasing revenue, but also on improving the economy and business environment for a sustainable fiscal future.
Aurangzeb stated the goal is to raise the tax-to-GDP ratio to at least 13% for fiscal sustainability. Although the government is behind the tax revenue target, they are working to meet it, with plans to discuss the issue with the IMF during their mission visit.
Minister of State for Finance and Revenue Ali Pervaiz Malik revealed that around 5 million individuals filed their tax returns by October 2024, up from 3 million last year. After analyzing consumption data, the government identified 190,000 non-filers who are likely liable for Rs50-60 billion in direct taxes.
In response to questions about the GST rate, Langrial suggested a potential reduction to 10-12% in the coming years.
Meanwhile, Information Minister Attaullah Tarar dismissed concerns raised by international agencies over the conviction of 25 civilians by a military court for their involvement in the May 9 riots, maintaining that Pakistan remains compliant with all international obligations.
