Islamabad
Pakistan aims to boost total tax revenues by about 40% in the 2024/25 fiscal year, according to the government budget plans passed by parliament on Friday. In a nation where informal employment is prevalent and only 5.2 million out of over 240 million residents pay income tax, the goal is to raise around $46 billion from a total budget of approximately $68 billion.
This tax-heavy budget, which also includes the elimination of petrol and gasoline subsidies, precedes further discussions with the International Monetary Fund (IMF) for a loan of $6-8 billion to help Pakistan avoid defaulting on its debts. This would be the 24th such loan for South Asia’s slowest-growing economy.
“We had to prepare this budget with the IMF in mind because that’s what the circumstances demand,” Prime Minister Shehbaz Sharif stated earlier this week.
For months, Sharif’s government has been cracking down on tax avoidance by blocking SIM cards and issuing travel bans. Local media report that Islamabad also aims to reclaim lost tax revenues from Netflix.
“There are no sacred cows,” Finance Minister Mohammed Aurangzeb declared at the start of June. “Everyone has to pay their taxes.”
However, with year-on-year inflation projected to reach 13.5% this month, the tax increases—comprising a 48% rise in direct taxes and a 35% hike in indirect taxes—are expected to be unpopular with voters. According to the World Bank, 40% of Pakistanis already live below the poverty line, with another 10 million just above it.
