FINANCE Minister Muhammad Aurangzeb’s ‘hard talk’ at a retail business conference on Thursday was long overdue. While appreciating the retail sector’s substantial contribution to employment and GDP, he nevertheless took the retailers to task for their negligible tax contribution, warning them that the country could not afford yet another “boom-and-bust cycle”. “Every sector must contribute to taxes. The current burden on the salaried class and manufacturing sector is unsustainable,” he said, while urging the retailers to ‘formalise’ their businesses and contribute to national prosperity since the time for free rides was over.

Indeed, as minister, Mr Aurangzeb has been saying all the right things. But it is time for him to walk the talk. Appealing to the good sense of tax evaders will no longer do. The utter failure of the Federal Board of Revenue to meet the revenue target under the Tajir Dost scheme underlines the need for harsher measures to enforce the tax laws. Retailers are not the only tax dodgers. Those profiting from urban real estate and the ones in the agriculture supply chain, too, are paying only a fraction of what is due to the system in taxes. Making laws does not automatically increase tax compliance. Take the example of real estate. There are various federal and provincial levies on property transactions. However, not even a handful of people pay the exact amount that they are supposed to. Even the organised industry is not paying what it owes to the national exchequer in taxes. The tax gap in the textile industry, especially at the spinning stage, is estimated by the FBR to be Rs700bn. The increase in agriculture tax rates will not boost revenues from this sector; it will require strict enforcement, the use of technology and, of course, strong political will to enforce the amended law. After retailers, the minister must also pay a visit to his friends in the business of real estate, who are seeking amnesty for the realty sector to ‘grow the economy and create jobs’. It is time they also got a hard talk from him. More importantly, he needs to sit down and talk to his cabinet colleagues who are pushing for such moves to get premature growth for political and personal reasons. That would be the hardest part of his job but without reining in these elements in government, no reform effort can succeed.

Published in Dawn, February 22nd, 2025