Govt expects Rs7bn revenue from 5,000 rich persons

ISLAMABAD: Minister of State for Finance Ali Pervez Malik Thursday said tax machinery would dispatch notices to 5,000 high-net-worth individuals (HNWIs) with a value of Rs27 billion, and government could fetch Rs7 billion from them.

Addressing an event arranged by Policy Research Institute of Market Economy (PRIME) here, the minister said FBR has prepared a Transformation Plan for digitisation and broadening the narrowed tax base.

Based on the audit and transaction information of 200,000 potential non-filers, FBR would dispatch notices to 5,000 high-net-worth individuals within two weeks, he said.

He said all those individuals owned at least three cars, earned Rs100 million profit on their bank accounts, paid over Rs200,000 monthly credit card bills and educated their children in private schools. Their estimated net worth is Rs27 billion, and government expects Rs7 billion in revenues from them, he said.

On the occasion, Aleksi Aleksishvili, former finance minister of Georgia, shared insights on his country’s successful tax reforms, which simplified tax system and reduced taxes to just six types. “Simplification of tax system, along with broader reforms to ease business regulations, is key to fostering growth”, Aleksishvili said.

The 4th Pakistan Prosperity Forum, hosted by Prime Institute on Thursday in Islamabad, centered around the theme “Tax Policy for Growth”.

Inclusivity, resilience and sustainability are three guiding principles essential for meaningful economic reforms in Pakistan, said Minister of State for Finance, Revenue and Power, Ali Pervaiz Malik.

Speaking at the forum, Minister of State emphasised these principles must shape government policy decisions to ensure long-term stability and growth. He highlighted government’s push to modernise Federal Board of Revenue (FBR) through a digitalisation programme, data sharing and analytics to expand the tax base.

“By leveraging data, we can identify new sources of revenue and improve compliance. This initiative is crucial for improving transparency, enhancing tax collection and reducing administrative inefficiencies”, he said. It will help bring more people into the tax net, making the tax system more equitable, he added.

“Government is committed to ensuring reforms are inclusive, resilient and sustainable”, said Pervaiz Malik. These principles are vital for creating an economic environment that supports all segments of society and ensures sustained growth over time, he said.

Advisor to KPK CM on Finance pointed out slow pace of agriculture tax collection. “Out of Rs12,971 billion FBR target for agriculture, only Rs5 billion has been collected by provincial governments”, he said. Provinces must prioritise tax mobilisation, and federal government should expand its presence in real estate sector, Aslam remarked.

Rizwan Rawji, a Supply-Side Economist, warned that State-Owned Enterprises (SOEs) continue to strain fiscal solvency. “State-owned enterprises heavily impact fiscal solvency, and the interest rate should be kept in single digits to reduce debt burden”, he said. More is being paid on external debt than received in new external financing, he noted.

Arshad Dad, Chief Advisor of Constructors Association of Pakistan, called for changes to the minimum tax regime, highlighting its impact on Association of Persons facing high withholding taxes. “The current withholding taxes of 7.5pc-8pc are unsustainable for companies with a 10pc profit margin”, he said.

Dr Ali Salman, Executive Director of PRIME Institute, highlighted Pakistan’s inconsistent tax policies, stating, “Ad-hoc measures and lack of a coherent policy are damaging Pakistan’s economic prospects. The current tax regime fosters an environment of tax evasion and weak compliance”. He warned of long-term economic instability due to tax evasion, compliance challenges and revenue shortfalls.

Dr Mahmood Khalid suggested eliminating exemptions, which distort tax system and encourage rent-seeking. He proposed removing all exemptions, including Income Tax exemptions, to increase tax revenues by 37pc and raise tax-to-GDP ratio by 3.36pc.