Finance Minister Muhammad Aurangzeb emphasized the urgent need to bring the undocumented economy into the tax system, stating that the country can no longer sustain people who avoid paying taxes.
He pointed out that industries such as manufacturing, services, and salaried workers are carrying an unfair share of the tax burden. To create a more balanced system, sectors like agriculture, retail, wholesale, and real estate must also start contributing. Speaking at the “Retail Reimagined: Innovate, Collaborate & Thrive” conference, organized by the Pakistan Retail Business Council (PRBC), Aurangzeb stressed that the current situation is unsustainable.
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He noted that while the formal sector is paying taxes, it is indirectly supporting those who avoid taxation. “Pakistan cannot afford free riders anymore,” he said, calling for immediate documentation of the parallel economy.
Focusing on the retail sector, he pointed out that while it contributes 19% to the GDP, its tax contribution is only 1%, highlighting the need for better compliance.
Aurangzeb spoke about Pakistan’s improving economic situation, citing a decline in inflation, a lower policy rate, stable currency, and better foreign exchange reserves. He expressed optimism that Pakistan would regain a single B credit rating this year, helping the country attract more investment and return to international financial markets.
The government aims to make Pakistan a “bankable brand” and avoid repeating past economic cycles of boom and bust. To achieve sustainable and inclusive growth, the focus is on taxation, energy, state-owned enterprises (SOEs), and public finance reforms.
The finance minister acknowledged that a major transformation in taxation is underway, with efforts to restore public trust in the tax system. He stressed that the government cannot afford businesses and individuals refusing to engage with tax authorities.
Regarding government restructuring, he mentioned that a comprehensive plan is ready for implementation. Aurangzeb praised Dr. Ishrat Hussain’s work on institutional reforms during the previous government, recognizing his efforts in creating a framework for government rightsizing.
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On privatization, Aurangzeb admitted that the process has faced obstacles but reaffirmed the government’s commitment. The privatization of Pakistan International Airlines (PIA) is being relaunched, and the government is determined to push it forward.
