Prime Minister Imran Khan on Wednesday said the true VIPs of Pakistan were those people who pay the most tax and such citizens should be facilitated and honoured.

Addressing a tax awards ceremony in Islamabad, the premier said there was a need to change the mindset under which wealth creation was considered a "sin", so that people could be encouraged to invest in Pakistan.

For people who don't pay their taxes, the prime minister said they should keep in mind that the country's economic situation would worsen "if we don't change our mindset" today.

Examine: Bridging the tax gap

He said Pakistan simply could not prosper with just 1.7 million people filing taxes in a country of 210m.

As a result of this disparity, Khan said, the government is forced to impose indirect taxes on the common people who often cannot bear this burden.

He said it was "unfair" that the prime minister was having to pay the same tax on things like petrol and diesel as a daily-wage labourer.

He noted that only 72,000 people from across the country declare an income of over Rs200,000, but added that it was "understandable" if people shied away from paying taxes because of their concern that their money would not be fully utilised for the uplift of the lower segments of society.

The premier regretted that Pakistan had not adopted the modern concepts from the state of Madina, the most important element of which he said was the collection of Zakat from the affluent which was then spent on the welfare of the masses.

"It is my mission ... to tax those people in Pakistan whose [luxurious] lifestyles do not match with the amounts of taxes they pay," Prime Minister Khan said, stressing that he does not believe in raising the tax rate but prefers widening the tax net.

The premier said his government had adopted austerity measures itself first, with all ministeries directed to cut their expenditures by 10 per cent.

"I have reduced expenditures of Prime Minister House by 30pc ... saving Rs150m so far," he stated.

He regretted that on one hand there were not enough medical facilities for the poor in the country, and on the other, former prime minister Nawaz Sharif, his family members and other PML-N leaders tended to go abroad for their medical treatment.

"Taxpayers' money is not for our personal indulgence," the premier said, assuring the people that their money would be spent on their own welfare.

He said the government was making efforts to develop a tax-paying culture, including through reforms in the Federal Board of Revenue (FBR) and by moving towards e-governance to minimise the interaction between the tax collector and the taxpayer.

Once the system is fixed, the prime minister hoped that the country's annual tax revenue would rise to Rs8 trillion from a current Rs4.5 trillion.

'Catch the big fish'

Finance Minister Asad Umar in his address said the tax that the government collects annually is simply not enough to run the affairs of the country and that other economies of a similar size collect more taxes than Pakistan.

He said the first measure in the drive to increase the tax-to-GDP ratio should be making it easy for people to pay taxes. The minister pointed out that all of FBR's laws are in English, a language he said was understood by only a small minority in the country.

Additionally, he said, the gathering of information by FBR should be technology-based and people should only be asked the most essential questions.

The second step should be making it impossible for people who do not pay taxes to "find a place to hide".

"There is no need to run after hundreds of thousands of people for this, [just] catch the big fish and the message will automatically reach down to the masses," the minister advised the revenue authorities.

Thirdly, he said it was a right of the Pakistani taxpayer that their money is spent only on the welfare of the country.

"That money cannot be used to build properties in London, or to store in banks of Switzerland, or to erect towers in Dubai," he said.

Abbasi refuses to attend taxpayers lunch

Meanwhile, former prime minister Shahid Khaqan Abbasi decided against attending a luncheon hosted by Prime Minister Khan for the top taxpayers of the country.

According to a list issued by the FBR, PML-N leader Abbasi is the fifth-highest taxpayer in Pakistan, and the only Islamabad resident among the top 100 taxpayers.

Speaking to reporters on Wednesday, Abbasi said he was not a new taxpayer and claimed to have been paying his taxes for the last 32 years.

He said he had received an invitation for the luncheon but he was not in the country at the time.

The former premier questioned "what he could avail" by attending a ceremony hosted by a prime minister and his cabinet "who themselves do not pay taxes".

He said it was Prime Minister Khan's duty to reveal before the public how much tax he and his cabinet members pay.

Abbasi alleged that the FBR had committed an "unlawful" act by issuing a list of the top taxpayers. "It is a confidential matter which is not made public," he said, adding that the parliament releases its own list of members who are taxpayers.