Pakistan's tax collection insufficient to meet financial needs: WB

World Bank (WB) has declared Pakistan’s tax collection insufficient to meet its financial necessities.

The report states that progressive countries should have a tax-to-GDP ratio of at least 15%, while Pakistan is only 11.6%. The World Bank has called for an increase in tax collection from major and vital sectors in Pakistan.

Terming the tax collection in Pakistan, the lowest in the region, the World Bank report suggested that despite various reform efforts, tax collection is not improving in Pakistan.

The World Bank has recommended increasing tax collection from major sectors, and eliminating income tax, sales tax, and customs duties exemptions.

The World Bank has also proposed linking property tax rates to market values by connecting the land ownership record with national identity cards and national tax numbers. Along with the recommendation to eliminate exemptions on income tax, sales tax, and customs duties, the World Bank has suggested a standard GST (General Sales Tax) rate of 18% on various goods.

The report advises bringing individuals earning less than 600,000 rupees annually into the tax net. It also recommends imposing additional taxes on agriculture, property, real estate, retail, and the cigarette sector while reducing taxes on luxury items.

According to the World Bank, Pakistan is incurring significant losses in revenue due to tax concessions.

The corporate income tax system in Pakistan is excessively complex, and many companies benefit from preferential tax schemes.

The report emphasizes that Pakistan’s financial stability depends on revenue reforms.