Pakistan needs to abolish tax exemptions: World Bank
Business
WB's country director advises taxing agriculture, real estate and retail sectors
ISLAMABAD ( Web Desk) - The caretaker government has been urged to abolish all tax exemptions and bring incomes from agriculture, properties and retail businesses under the effective tax net.
The move, if implemented, is expected to generate an additional revenue of up to four per cent of GDP (about Rs4 trillion) in the short term, said the World Bank's top representative in Pakistan on Monday.
WB’s Country Director Najy Benhassine, who was flanked by senior economist Tobias Haque, told a media briefing that the people associated with the real estate and agriculture sectors possessed most of the untaxed wealth, which should be taxed by the provincial governments to be able to improve services and reduce the financial burden on the federal government.
Both the sectors should yield a revenue of 2pc and 1pc, respectively, of the GDP (or about Rs2.1 trillion and Rs1tr, respectively, according to official GDP size), Mr Haque said.
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He was of the view that the provincial governments could immediately enhance land taxation to 2pc of GDP by establishing reliable records of land ownership, harmonising the three valuation systems currently in use, and increasing property tax rates to match comparable countries.
Pakistan’s total revenue collection averaged 12.8pc of GDP in past decade, substantially lower than South Asian average of 19.2pc.
The global lender also recommended that Pakistan should simplify its income tax structure while aligning it for both salaried and non-salaried individuals.
