In Pakistan, an alarming 50% of the economy operates through black money, which refers to income or wealth that is not reported to the government for taxation. This situation has long been a challenge for the country’s financial system, but the government is now taking strong steps to address it. Recently, the government announced a new initiative aimed at improving tax compliance and tackling the issue of undocumented wealth.
During a meeting of the National Assembly’s Standing Committee on Finance and Revenue, it was revealed that the government is taking bold steps to bring black money into the formal economy. One of the key actions being taken is the recruitment of 1,600 new auditors who will be responsible for tracking individuals and businesses that are not paying taxes. These auditors will also help to enforce the new tax laws under the Tax Laws (Amendment) Bill 2024.
The government has not focused on the issue of non-filers—those who do not file their taxes—for the past 75 years, but now, the Minister of State for Finance, Ali Pervaiz Malik, shared that the government is committed to addressing this long-standing problem. The new tax laws include measures to restrict non-filers from making big financial transactions such as buying property, purchasing vehicles, or investing in businesses. This is part of an effort to bring more people and businesses into the formal economy and ensure they pay their fair share of taxes.
FBR Chairman Rashid Mahmood Langrial emphasized that the new tax measures are specifically designed to target high-income individuals and businesses that have been evading taxes. The new law gives additional powers to the Federal Board of Revenue (FBR) officers, allowing them to block transactions involving black money and other forms of tax evasion.
Despite the government’s push for these changes, some members of the committee raised concerns about the potential impact on the economy. They warned that rushing such significant changes could cause problems, particularly for the common people. There is worry that the new rules could disrupt people’s ability to buy property, vehicles, or even invest in businesses, which could harm the economy further.
Pakistan’s economy is largely informal, with a significant portion operating through black money. Lawmakers pointed out that nearly half of the country’s economic activity takes place outside of the formal tax system, which makes it difficult for the government to track and tax these transactions. This has led to a situation where many businesses and individuals are able to avoid paying taxes, contributing to the growing challenge of undocumented wealth.
To address these concerns and ensure a smooth implementation of the new tax laws, a five-member sub-committee was formed to consult with various stakeholders. This includes engaging with the FBR and organizations like the Association of Builders and Developers (ABAD). The sub-committee is tasked with reviewing the potential impact of the new bill on sectors like the property market and other industries. They are expected to provide a report within the next 10 days, which will offer further insights into how the bill could affect various parts of the economy.
The government is taking important steps to tackle black money and increase tax compliance, but the challenges are significant. As the economy moves toward greater formalization, it remains to be seen how effective these measures will be in addressing the deep-rooted issues of tax evasion and informal economic activities. The next few weeks will be crucial in determining whether the government’s efforts can bring about the desired changes without causing too much disruption to the everyday lives of Pakistan’s citizens.
Read Also: Pakistan Considers Tough Laws to Tackle Black Magic Practices!
1 thought on “Half of Pakistani Economy Relies on Black Money!”