World Bank expresses disappointment over Pakistan’s tax
collection efforts
The World Bank has stated that Pakistan's tax collection
falls short of meeting its financial requirements. According to the report,
progressive countries typically aim for a tax-to-GDP ratio of at least 15%, but
Pakistan's ratio stands at only 11.6%. The World Bank is urging Pakistan to
enhance tax collection efforts, particularly from key and essential sectors.
Describing Pakistan's tax collection as the lowest in the
region, the World Bank report indicates that despite various reform
initiatives, Pakistan's tax collection has not shown improvement. The World
Bank has put forward several recommendations, including increasing tax
collection from major sectors and abolishing exemptions on income tax, sales
tax, and customs duties.
World
Bank recommends establishment of a 'National Council of Ministers' in Pakistan
Additionally, the World Bank has suggested linking property
tax rates to market values by integrating land ownership records with national
identity cards and national tax numbers. Alongside the proposal to eliminate
exemptions on income tax, sales tax, and customs duties, the World Bank has
advised implementing a standardized GST (General Sales Tax) rate of 18% on
various goods.
The report also advises bringing individuals earning less
than 600,000 rupees annually into the tax system and imposing additional taxes
on sectors such as agriculture, property, real estate, retail, and the
cigarette industry, while reducing taxes on luxury items. The World Bank
emphasizes that Pakistan is experiencing substantial revenue losses due to tax
concessions.
Pakistan
requests World Bank to restructure FIIP
Furthermore, the report highlights the complexity of
Pakistan's corporate income tax system, with many companies benefiting from
preferential tax schemes. It underscores the importance of revenue reforms for
Pakistan's financial stability.
Source: ARY News