6 ministries face the axe under austerity drive

FinMin says number of tax filers has doubled in a year

ISLAMABAD:

The government has listed six ministries for abolition as part of efforts to streamline and cut expenditures, Finance Minister Muhammad Aurangzeb announced on Sunday, highlighting key reform measures.

In a news conference, the minister revealed plans to eliminate 150,000 vacancies and enforce stricter actions against non-filers of tax returns.

He assured that tax collectors would also be held accountable.

He said that the decision to abolish or merge six ministries had already been made and was now in the implementation phase. Following this, five more ministries would undergo the same process.

"The abolition of six ministries will proceed, including the Ministry of Capital Administration and Development Division, which will be dissolved, while two other ministries will be merged," he announced at the press conference.

Regarding the implementation of reforms in government institutions, Aurangzeb reaffirmed the government's commitment to right-sizing and reducing expenditures. "Around 60% of vacant posts, approximately 150,000, will be abolished following cabinet approval," he stated.

He said that increasing tax revenues was inevitable, noting that the number of tax filers had doubled compared to last year. "Last year, there were 1.6 million filers, and that number has now risen to 3.2 million," he said.

Aurangzeb further highlighted that out of 300,000 wholesalers, only 25% are registered for sales tax, and just 14% of retailers are currently registered. "We have extensive data that we will use to bring them into the tax net," he added.

The minister warned that non-filers would face restrictions, including being unable to purchase vehicles or properties. They would also encounter difficulties with current bank accounts and money withdrawals.

He pointed out that tax evasion amounted to around Rs1.3 trillion. "Production units would sell goods only to registered wholesalers," he said. He warned that the government might take further action such as blocking utility services for non-filers.

He assured that tax collectors would also be held accountable. "Reforms are needed within the Federal Board of Revenue (FBR), and we must improve its efficiency. Auditing is not the function of the FBR," he added. "We are recruiting 2,000 chartered accountants."

 

Economic stability

 

The finance minister also assured that the government was taking steps to prevent smuggling. "The government will establish digital check posts at key points to prevent smuggling," the minister told reporters.

Aurangzeb said that macroeconomic stability had laid the foundation of a strong economy. He said the current economic situation was strong because of the government's policies.

"Inflation has come down to single digit, the policy rate has also come down due to low inflation; exports have increased by 29%; [and] foreign exchange reserves are also at the highest level," he said, highlighting the positive impact of the government policies.

He said that the International Monetary Fund (IMF) programme had been approved under the leadership of Prime Minister Shehbaz Sharif. "If we are declaring this as the last IMF programme, we must fundamentally change the DNA of our economy," the minister added.

Reaffirming the government's resolve to implementing home-grown structural reforms, Aurangzeb emphasised the need to bring fundamental changes in the DNA of the country's economy, leading to an export-driven model.

These measures will cause difficulties for a short time. If tough decisions are not taken today, the burden will come again on the salaried class," he said.

"If we are to go on the path to sustainable development, difficult decisions will have to be taken and implemented." The minister emphasised the need for the private sector to lead the country.

He said, there were two main reasons for going to the IMF for Extended Fund Facility (EFF), which included bringing permanence to macroeconomic stability and executing critical reforms under home-grown economic agenda.

He said following the decline in inflation, policy rate has also come down while the Karachi Inter-Bank Offered Rate (KIBOR) also declined, which, he added, would have positive impact on industry.

Responding to a question, he said if Pakistan wanted to join G-20, it would have to document its economy and eliminate cash economy.

(WITH INPUT FROM APP)