Pakistan has suspended 210,000 SIM cards from users who failed to file tax returns in a bid to boost its revenue base, following a directive issued by the Federal Board of Revenue (FBR) in April.
According to FBR data, out of Pakistan’s population of over 240 million, only 5.2 million people had filed income tax returns in 2022. Following FBR instructions, telecom authorities were tasked with disabling the connectivity of these non-compliant SIM cards. Of the total blocked, 62,000 have since been restored.
Also read: Pakistan to block mobile SIM cards of tax defaulters | Vantage with Palki Sharma
“We have unblocked the SIM cards of those who have paid their taxes,” FBR spokesman Bakhtiar Muhammad told AFP, adding that no one is willing to pay their taxes voluntarily. We have to create an enabling environment for people to pay their taxes.”
Pakistan has more than 192 million mobile phone subscribers and four telecommunications service providers, according to the telecommunications authority. Pakistanis are required to register their SIM cards with their national ID numbers, which are often used for multiple connections.
“Access to communications services is a fundamental human right and is essential for many other essential services, including access to information, education and emergency services,” an executive at one of the four telecoms companies told AFP on condition of anonymity.
“We are in dialogue with the authorities to encourage them to use technology to increase tax collections, as any sudden measures could disrupt the provision of these essential services.”
What makes Pakistan’s budget so controversial is the fact that, without providing any relief to the middle class, parliament recently increased the effective income tax rate for salaried workers to 39 percent, the corporate income tax rate to 44 percent, and the personal income tax rate for non-salaried workers to 50 percent from last year.
Interestingly, the Shehbaz Sharif government has exempted income tax on the sale of immovable property by serving or retired bureaucrats and serving or retired military personnel.
Taxes are rising on already stressed wage earners at a time when certain segments of society have lost almost half their purchasing power over the past five years.
Pakistan’s tax system reinforces inequality and places a heavy burden on those least able to pay, and the IMF has called on Pakistan to abolish all special taxes, including low-income taxes on gains from stock market investments and bank deposits.
International financial institutions have recommended treating such profits as part of normal income. The IMF has been pressuring Pakistan to increase taxes on salaried workers until it collects higher taxes from non-salaried employers.
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