Assuring that Pakistan’s commitments to the International Monetary Fund will be upheld, Finance Minister Muhammad Aurangzeb said the government will not impose any additional taxes to cover the revenue shortfall.
Speaking to reporters in Islamabad on Wednesday, Aurangzeb stressed that Pakistan remains committed to raising its tax-to-GDP ratio to 11 per cent during the current fiscal year, in line with IMF targets.
He said that ongoing litigation over tax disputes in the courts represents a potential revenue source once resolved, which would help narrow the fiscal gap.
“The revenue shortfall will not be met through new taxes,” the minister said, adding that progress with the IMF has been constructive and discussions remain positive.
Aurangzeb reiterated that the government is determined to achieve the agreed tax-to-GDP target and expressed confidence that reforms, coupled with dispute resolution, will stabilise revenue flows.
FBR to focus on tax collection
Earlier, Aurangzeb told the Senate Standing Committee on Finance that the upcoming federal budget will not be prepared by the FBR, but instead by a newly established Tax Policy Board under the Ministry of Finance.
The minister said the new board will focus on policy formulation, while the FBR will restrict itself to tax collection.
He added that macroeconomic stability is beginning to reflect in Pakistan’s financial indicators, citing the recent repayment of a $500 million Eurobond and plans to issue a Panda Bond by the end of November.
Aurangzeb stressed that the Tax Policy Board will function year-round to engage in continuous budgetary consultations, unlike the past practice of rushed deliberations just weeks before the budget presentation.
An advisory board comprising experts and private sector representatives will also be set up, though its recommendations will not be binding.
Senators criticise FBR practices
During the session, committee members raised concerns about the FBR’s conduct. One senator criticised its heavy-handed approach towards traders, remarking: “Tax collection is not done with a Kalashnikov. Treat traders as traders, not like Taliban or terrorists.”
A lawyer representing an aggrieved citizen alleged that the FBR had violated presidential directives by challenging Federal Ombudsman decisions in court. He argued that under the Ombudsman Reforms Act 2013, ministries and divisions are bound to implement presidential orders.
The Attorney General, however, maintained that goods classification matters fall outside the Federal Tax Ombudsman’s jurisdiction and should be dealt with by the relevant classification committees.
Senator Afnan accused the FBR of filing politically motivated cases against him, claiming the authority had previously lodged false charges which he successfully contested.
Inland Revenue Operations Member Hamid Ateeq Sarwar advised the senator to pursue appeals through proper legal channels, assuring that decisions by appellate forums would be respected.
Other matters discussed
The minister also addressed questions about the Virtual Assets Bill, confirming that the finance ministry had received 16 queries from the committee and would respond in detail. He said the bill should foster economic growth rather than create fear.
Senator Dilawar, a tobacco grower, complained that despite a bumper crop this year, buyers were unwilling to purchase tobacco even at Rs300 per kilogram. Aurangzeb replied that irregularities in sectors such as tobacco, beverages, and sugar must be addressed transparently.
Committee members welcomed the separation of tax policy from the FBR, calling it a long-overdue reform. They urged the government to ensure the new board remains active and effective in policymaking.
