Pakistan Faces Annual Tax Evasion of Rs. 3 Trillion: Miftah

Finance Minister Miftah Ismail Friday claimed that tax evasion in the country amounts to Rs. 3,000 billion annually. He made this claim during the budget 2022-23 presentation in parliament.

The finance minister said that a comprehensive program is being launched to curb this evasion.

The finance minister said, “Rs. 3000 billion tax is being theft annually and a very comprehensive program is being launched to curb this evasion.”

He also expressed hope that reasonable growth would be seen in tax recovery. However, he did not share any plan of action to achieve this target.

Different international organizations, including the International Monetary Fund (IMF), the World Bank (WB), and the Asian Development Bank (ADB), believe that there is a distortion in the tax system of Pakistan that needs fixing. Tax evasion and tax exemptions are among the main hurdles in increasing tax collection.

On the other hand, the Federal Board of Revenue (FBR) and the World Bank have been working on a project to increase tax collection and the number of taxpayers in the country for a couple of years.

It is pertinent to mention here that the new coalition government has set a target of Rs. 7,004 billion tax collection for the FBR, which is an increase of almost Rs. 1,000 billion from the expected tax collection during the current fiscal year.

Of the total tax collection target for the FBR, Rs. 2.573 trillion will be collected through direct taxes, and Rs. 4.431 trillion will be collected through indirect taxes during the upcoming fiscal year.

Moreover, of the total indirect taxes, the government has proposed to increase the target of income tax by Rs. 441 billion to Rs. 2,558 billion for the fiscal year 2022–23 compared to Rs. 2,117 in the outgoing fiscal year.

The government also proposed to increase the target of sales tax by Rs. 570 billion to Rs. 3,076 billion for the fiscal year 2022–23 compared to Rs. 2,506 in the outgoing fiscal year.