Finance Minister Muhammad Aurangzeb announced on Sunday that the government has returned approximately Rs68 billion in income tax refunds since the process began on July 1. Considering the size of the country and its economy, this is a relatively small number. This is not surprising, given Pakistan has one of the weakest tax collection systems in the world: a lower collection rate equals a lower percentage of returns.

Another reason for this outcome is the simple fact that not many people in the country are aware of the tax return system, how to utilize it, and how to benefit from the money returned. Essentially, taxpayers can reclaim excess taxes paid to the Federal Board of Revenue (FBR) if their tax liability is lower than the amount they have paid. The process involves filing an electronic tax return, followed by an application through the FBR’s Iris system. In many cases, the filer gets a significant portion of their annual taxes returned, a sum that is now ready to be invested elsewhere.

It is instructive to consider how these returns are utilized in other countries where tax literacy is widespread, and the systems are far more robust. In countries like the United States of America, “tax-return season” is an actual marketing and business terminology, as the vast number of people receiving their returns at the same time spurs a spending spree that stimulates the economy. Individuals plan significant purchases around this time and are incentivized to know and avail themselves of all tax exemptions possible.

With a general dissatisfaction with how taxation is structured in the country, promoting literacy on tax returns can not only increase participation in the tax net but also provide relief to salaried classes struggling against high taxation.