Recently, Pakistan secured a loan programme from the International Monetary Fund (IMF) after months of delays and preconditions, like imposition of more taxes.
This loan presents an opportunity for the government to reform all its economic policies, and implement robust measures against tax evasion and illicit trade, which could significantly boost the economy.
The federal finance minister recently stated that the country’s economy could potentially be worth more than $700 billion — double the current estimate of $325 billion. The undocumented sector is causing a massive loss owing to tax evasion every year.
Additionally, the minister estimated that the menace of smuggling costs the exchequer Rs750 billion every single year.
These figures highlight the critical financial challenges Pakistan is facing. Without addressing these significant losses, the country will struggle to achieve financial stability. The situation has already had a detrimental impact on various industries, particularly multinational corporations (MNCs), which are increasingly considering exiting the market due to economic instability.
For establishing a sustainable taxation system, it is vital to ensure a conducive business environment and a consistent approach to combating tax evasion and illicit trade. Such steps are crucial for sustaining growth as well as preventing further damage to the national economy.
USAMA GHULAM RASOOL
KARACHI
