Finance Minister Muhammad Aurangzeb has underscored the urgent need for tax reforms in Pakistan, highlighting that the economy cannot thrive when certain sectors contribute minimally to revenue.

He stressed that structural reforms are crucial in areas such as taxation, energy, state-owned enterprises, and public finance to foster sustainable and inclusive economic growth.

Aurangzeb advocated for improved documentation and enforcement within the economy, emphasizing the necessity of bringing more individuals into the tax net.

During the 'Retail Reimagined' conference, he pointed out that the manufacturing, services, and salaried sectors disproportionately bear the tax burden, which is not sustainable.

He noted that while the retail sector contributes 19% to Pakistan's GDP, it only accounts for 1% of tax revenue, indicating a pressing need for change in tax contributions across various sectors.

Aurangzeb criticized the presence of 'free riders' in the economy, asserting that the formal sector is currently subsidizing those who do not contribute to the tax system.

He highlighted the critical role of the private sector in driving economic growth, asserting that the government must establish a stable policy framework to support this.

The Finance Minister discussed plans for government rightsizing and restructuring, referencing a framework developed by Dr. Ishrat Hussain to guide these efforts.

Aurangzeb revealed that approximately Rs9.4 trillion is circulating outside the formal economy, acknowledging that addressing this issue will take time but stressing the need for progress.

He reported improvements in macroeconomic indicators, including lower inflation and a stable currency, expressing optimism about regaining a single B credit rating within the year.

Aurangzeb acknowledged the challenges surrounding the privatization process, particularly for Pakistan International Airlines (PIA), but reiterated the government's commitment to advancing it.

He mentioned that provincial governments are beginning to implement agricultural taxes and that efforts are underway to integrate the retail and real estate sectors into the formal economy.