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Ready to offend some people in order to increase average tax rate, says Hafeez Shaikh

Adviser to the Prime Minister on Finance Dr Hafeez Shaikh on Wednesday insisted that “rich people in other countries pay higher taxes” as compared to the upper class in Pakistan.

Addressing a press conference a day after the government announced the budget, Sheikh said that the average tax rate of Pakistan is 11-12 per cent, which is “one of the lowest in the world and is not acceptable”.

“If we have to offend some people for this (increasing tax rate), then we are ready to do it,” he declared.

Commenting on the ambitious tax target for fiscal year 2019-20, Sheikh said: “Pakistan’s people, especially the rich, will have to be sincere with the country and will have to pay taxes.”

“We will have to reduce our expenditures and we have to give this message to the Pakistani public that we (the government) will be at the forefront in reducing our expenses. If we are asking people to sacrifice, we will have to convince them that we are ready to make sacrifices as well.

“So we [adopted] austerity and reduced our expenses notably,” he added.

Sheikh revealed that the distinction between tax filers and non-filers will also be eliminated.

“If a person, who has been a non-filer in the past, buys a car or property, he will automatically have to become a filer. If he fails to become a filer within 45 days, he will receive a tax liability within half an hour after the 45-day limit has lapsed,” he warned.

Sheikh further said that while businesses will not have to pay taxes over exported goods, they will be taxed over products they sell in the domestic market.

 

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