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FBR Chairman Rashid Langrial Highlights Tax System Issues, Calls for Reform
FBR Chairman Rashid Langrial discusses the challenges in Pakistan’s tax system, pointing out the tax gap, the issues with the salaried class, and the need for reforms to improve tax collection.
ND
by News Desk
2025-01-11
FBR Chairman Rashid Langrial Highlights Tax System Issues, Calls for Reform

Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial addressed the ongoing challenges facing Pakistan’s tax system, underscoring the country’s struggles with tax collection and the need for comprehensive reform.

Langrial pointed out that a significant portion of Pakistan’s population, about 60 percent, does not have taxable income, contributing to a tax gap of around 2 trillion rupees. He noted that while there are approximately 40 million people in Pakistan who own homes with air conditioners, many of them do not fall under the tax net or fail to pay taxes adequately. The FBR chairman emphasized that the tax system in Pakistan is designed for a small fraction of the population, around five percent, which limits the overall efficiency of tax collection.

Addressing the criticism regarding the tax system, Langrial remarked that those who propose solutions are often not paying taxes themselves. He stated that Pakistan, being a developing country, is facing severe challenges with both the payment and collection of taxes. As a result, the salaried class has been increasingly included in the tax net.

Langrial acknowledged the flaws in Pakistan's tax structure, particularly the high tax rates that affect ordinary citizens. He explained that the country does not fall into the category of being an overtaxed nation, comparing Pakistan’s system to India’s, where the sales tax on goods is managed by the provinces, while in Pakistan, it is controlled by the federal government.

The FBR chairman also highlighted the failure of the education system to contribute effectively to improving tax compliance. He noted that while more taxes should be collected, the system has struggled to do so, leading to the inclusion of more salaried individuals. He hinted at future measures such as a new law that will make it difficult for individuals to make purchases if they fail to submit their tax returns.

Langrial also shared that the federal government is working to streamline administrative expenses by closing two ministries and several departments. He acknowledged the careful approach being taken by the Finance Minister, including the closure of certain posts and halting future recruitment. Langrial noted that last year, 200,000 retailers were added to the tax net, but many of them failed to declare their incomes, further complicating efforts to boost tax collection.

 
Tagged:

FBR

TaxReforms

TaxCollection

PakistanTaxes

SalariedClass
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