In the past six months, Pakistan’s tax authorities have successfully garnered Rs85 billion by targeting individuals who failed to file income tax returns. This revenue primarily stems from taxes imposed on cash withdrawals and electricity consumption, notably concentrated in the major cities of Karachi and Lahore.
The government instituted a 0.6% tax on cash withdrawals exceeding Rs50,000 and a 7.5% withholding tax on electricity bills surpassing Rs25,000 for those who hadn’t filed their income taxes.
Despite this notable influx of funds, Pakistan’s tax base remains relatively limited, prompting concerns about the sustainability of revenue growth. The strategy appears to prioritize taxing non-filers rather than proactively broadening the overall tax net, potentially hindering the country’s fiscal resilience in the long term.
To address this, the government has set a target to increase the number of tax filers to 6.5 million by June, emphasizing the importance of expanding the tax base for a more comprehensive and stable revenue stream.
