Rs36b tax evaded in ‘connivance with FBR’

No IMF needed if half of evaded taxes collected, says minister

ISLAMABAD:

Defense Minister Khawaja Asif emphasized the pervasive issue of tax evasion in Pakistan, citing a staggering Rs36 billion evaded with apparent connivance with the Federal Board of Revenue (FBR).

He underscored that even if half of this amount were collected, Pakistan could potentially forego reliance on the International Monetary Fund (IMF).

Addressing attendees at a ceremony at the National University of Sciences and Technology (NUST), convened for the release of a report on tax evasion in the tobacco sector, Asif lamented the prevalent perception that tax evasion was not considered a serious offense in the country.

He noted his consistent efforts to raise awareness of this issue both in parliament and within the federal cabinet.

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Highlighting the breadth of tax evasion, Asif mentioned sectors beyond tobacco, including tyres, electronics, and retail, where evasion was rampant. He pointed out that under-invoicing alone led to a staggering $3 billion in lost revenue.

“People neither consider tax evasion as corruption and dishonesty, nor is this act considered a crime. Instead, they consider it as an act of sharp-wittedness.”

Asif noted that tax evasion cases worth Rs2.8 trillion were pending in the courts.

The minister highlighted that at present, a sum of Rs9 billion taxes was being collected.

“If the tax is collected properly, it can increase from Rs9 billion to Rs36billion,” he continued.
The minister regretted that tax evaders had made their way into parliament.

He observed that there was no premium on honesty.

“The market share of those who are paying taxes honestly is dwindling. On the other hand, those who are not paying taxes are increasing their market share. There is a premium on corruption.”

Asif noted that tax evasion had damaged the country’s economic independence.

The report highlighted the introduction of the Track and Trace System (TTS) as a measure to curb illegal trade but indicated its failure to achieve the intended outcome, exacerbating the issue of tax evasion rather than mitigating it.