Pakistan’s Finance Minister, Muhammad Aurangzeb, has pledged to shift the tax burden away from salaried individuals and the documented sector in the upcoming federal budget. This shift will be facilitated through a significant push towards digitization and a reduction in reliance on cash transactions.
According to a report in Dawn, follows a series of pre-budget consultations with stakeholders, including commercial banks, development financial institutions, and representatives from various industries. These meetings focused on strategies to bring the undocumented economy into the formal system through increased digitalization.
The government is considering several measures to achieve this goal. These include additional taxes on cash transactions, incentives for digital payments, and potentially outright bans on cash payments in specific sectors. The Federal Board of Revenue (FBR), in collaboration with Karandaaz, Pakistan Revenue Automation Limited, and the banking sector, will identify these critical sectors.
A key focus of the consultations was accelerating Pakistan’s transition to a cashless economy. Participants emphasized the need for improved interoperability between digital payment platforms, particularly leveraging the Raast instant payment system. The goal is to create a more level playing field between cash and digital transactions by making digital payments more attractive and cost-effective for both consumers and businesses.
Addressing concerns about cost, the government plans to prioritize improving the cost structure of digital transaction infrastructure, aiming to make digital payments accessible to small merchants and underserved communities.
Minister Aurangzeb underscored the importance of a cashless economy, stating that it is not merely a policy goal but a necessity for long-term fiscal stability, competitiveness, and inclusive growth. He emphasized the need for urgent and coordinated action to create a user-friendly, inclusive, and interoperable digital payments environment for all Pakistani citizens.
