World Bank asks Pakistan to bring real estate sector into tax net
The World Bank has labeled
Pakistan’s tax system as inequitable, calling for a broader tax base that
includes the largely untapped property sector to ease the burden on the
salaried class and improve fiscal fairness.
Speaking at a conference hosted by
the Pakistan Institute of Development Economics (PIDE), Tobias Haque, the World
Bank’s lead country economist, criticized the narrow tax net. “It’s absurd that
only five million Pakistanis file tax returns in a country of 240 million,” he
said during a session titled "Charting Pakistan’s Fiscal Trajectory:
Enhancing Transparency & Trust." He also pointed out the country’s
overreliance on the regressive General Sales Tax (GST) to meet revenue needs.
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Haque emphasized the need for
accurate property documentation and fair taxation of real estate across the
board. He also cautioned against short-term gains from high tariff structures,
warning they could compromise long-term economic stability.
Adding to the discussion, PIDE Vice
Chancellor Dr. Nadeem Javaid highlighted systemic inefficiencies in development
spending, revealing that nearly 40% of funds are lost to commissions and
irregular practices. "No financial bill clears without 5% to 7%
commissions paid to officials — it’s an open secret," he said.
Ali Salman, Executive Director of
the Policy Research Institute of Market Economy (PRIME), criticized the
complexity of Pakistan’s withholding tax system. Of the 88 types of withholding
taxes in place, 45 generate less than Rs1 billion annually, he noted, despite
the FBR collecting around Rs1.2 trillion through this mechanism.
Speakers across the panel stressed
the urgency of fully digitizing Pakistan’s tax system. However, they
acknowledged key hurdles, including political resistance, outdated laws, and
lack of institutional coordination. Recommendations included real-time data
integration, automation of tax processes, and updated labor laws to support
more efficient tax administration.
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Participants also addressed the
growing public distrust in Pakistan’s tax regime. Inconsistent policies, lack
of transparency, and the disproportionate tax burden on compliant individuals
were cited as primary concerns. Rebuilding taxpayer confidence, they agreed,
will require streamlined rules, greater accountability, and digitized systems.
On a positive note, Haque praised
the introduction of Agriculture Income Tax (AIT) by provincial governments,
calling it a meaningful step toward a more equitable and inclusive taxation
framework.
Source: Profit Pakistan