Daily Briefs

Photo : Dawn

12 March 2020, Thursday

Pakistan’s tax collection is 62 per cent beneath potential: IMF

PR Daily Brief | PR Team

In brief

Pakistan’s tax collection is 62 per cent beneath potential: IMF Resident Chief

Lakshmi V Menon

The News International (12 March 2020), has quoted Teresa Daban Sanchez, IMF Resident Chief, saying “Pakistan’s tax collection is over 60 percent below what should be collected at the moment but it is equivalent compared to peer regional economies (‘s FBR collection level)” during a seminar on “Doing Taxes Better: Shifting the Paradigm of Tax Policy and Administration”, convened by PIDE on 10 March at the Pakistan Secretariat.

She said the tax structure was complicated by distortions and complexities. While maintaining that General Sales Tax (GST) is critical for Pakistan, Teresa said it required revamping and harmonization as it was hindering exports and suggested three options – first, constitutional amendments; second, consensus between provincial and federal governments for tax payment into unified portal and filing of single return; and third, finding technological solutions. She criticized that Islamabad’s excessive reliance on imports tax collection (50 per cent revenues from GST, Withholding Tax, Customs Duty, Regulatory Duty) owed to its ease. 

Dr Hamid Ateeq Sarwar, FBR’s Member Inland Revenue Policy, blamed economic cronyism and elite culture for FY 2019-20 tax exemptions swelling to Rs1.5 trillion. He suggested granting subsidies or incentives to deserving sectors in place of exemptions that have reduced FBR’s tax to GDP ratio. 

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