Major changes on the cards for boosting tax-to-GDP ratio to 15pc
Business
Risk register to be prepared to identify tax evaders by using data from banks, NADRA, other sources
ISLAMABAD (Dunya News/Web Desk) – A decision has been made to introduce changes in the tax policy for increasing the tax-to-GDP ratio to 15 per cent through close collaboration between the Federal Board of Revenue (FBR) and the International Monetary Fund (IMF), as Pakistan is searching for ways and means to enhance revenue collection, sources say.
The proposed move comes after the current economic crisis again highlighted the failure to expand tax net while imposing direct taxes and include wealthy individuals as well as booming and profitable sectors like real estate and retail to the list of filers.
It isn’t a surprise that the inability to enhance the tax-to-GDP ratio, currently among the worst in the wrold, is the root cause of the economic troubles Pakistan has been going through as different exemptions and the culture to avoid paying taxes means the government is neither able to meet its expenditures nor boost the development budget.
The result is obvious: the country lacks basic infrastructure and human resources catering to the needs to 21st century economy as Islamabad continues relying upon assistance from friendly countries, donor agencies and the IMF-like financial institutions.
But this dependence has serious consequences for the nation as the state policies are adopted according to the conditions set by these foreign actors.
Meanwhile, the burden is always shifted to the common people through indirect taxes and higher prices of electricity, gas and petroleum products, which has been the main contributor to the prevailing cost-of-living crisis triggered by a persistent record-high inflation.
According to the sources, the government will prepare a compliance improvement plan by March next year. It is important to note that the current $3 billion stand-by arrangement is set to expire on March 31.
In this connection, a risk register for the possible taxpayers – both the filers and tax evaders – would be finalised on the basis of information shared by the FBR field formations.
The necessary data for this purpose is to be compiled by using different sources including banks, the National Database and Registration Authority (NADRA), and the integration system developed by the FBR.
Hence, the whole exercise would help to identify and list the people who are currently not among the taxpayers while also sharing their details to the IMF, which has been press Pakistan hard to widening the tax base and collection.
The amendments, the sources say, will make the risk compliance management a part of the tax policy as a new round of talks is scheduled for today (Monday) between the FBR and an IMF team to separate the tax administration and policy.
