ZULFIQAR AHMAD
ISLAMABAD: Prime Minister Shehbaz Sharif on Saturday directed the authorities to intensify action against tax evasion and to address long-standing gaps in revenue collection, particularly in sectors such as tobacco and tiles, which officials say continue to account for significant leakages in the tax system.
Presiding over a weekly review of the government’s tax and tariff reforms, the prime minister said early indicators pointed towards an improvement in economic activity.
He noted that efforts to modernise the Federal Board of Revenue (FBR) and enhance transparency in tax administration were yielding encouraging results.
According to him, the positive trends emerging from the ongoing reforms demonstrated that the government’s policy direction was on the right track.
Officials briefing the meeting said tariff reductions introduced earlier this year had not led to any decline in state revenues, contrary to fears expressed by some stakeholders.
Instead, duty and tax collection on imports increased by 25 per cent, even though the volume of dutiable goods rose by only 3.6 percent.
They said this indicated that revenue growth remained strong despite lower tariffs, and that the reforms were helping to remove distortions within the system.
The meeting was informed that duty-free imports had risen by 41.5 percent during the same period, with most of the increase attributed to raw materials and intermediate goods used by the manufacturing sector.
Officials said the trend suggested improved industrial activity and was consistent with the government’s objective of lowering input costs to support export-oriented production.
They added that the tariff structure had been adjusted to encourage the import of essential industrial inputs while discouraging unnecessary and consumption-heavy imports.
The aim, they added, was to make domestic manufacturing more competitive and to create conditions for increased investment.
During the meeting, the prime minister directed the finance and revenue authorities to speed up the reform process and strengthen enforcement mechanisms in areas where under-reporting of production has historically been widespread.
He said the government expected measurable improvements in compliance, particularly in sectors with high revenue potential.
The country’s tax-to-GDP ratio remains among the lowest in the region, and officials acknowledged that without structural improvements, the country would remain vulnerable to fiscal pressures and external shocks.
Sharif emphasised that sustained implementation of reforms was essential for stabilising the economy and achieving the government’s growth and development targets.
He urged ministries and departments concerned to coordinate closely to ensure that policy decisions translated into meaningful outcomes.
The meeting was attended by Finance Minister Muhammad Aurangzeb, Climate Change Minister Musadik Malik, Petroleum Minister Ali Pervez Malik, State Minister for Finance Azhar Bilal Kayani, provincial chief secretaries and senior FBR officials.
