World Bank advises tax reforms in Pakistan to ease debt burden

ISLAMABAD: The World Bank (WB) has said Pakistan is collecting lesser tax than its actual capacity, ARY News reported on Tuesday.

Pakistan is falling short of Rs737 billion in tax collection, the World Bank said in its report and urged Islamabad to close all tax exemptions to release the burden of debts.

The WB has suggested Pakistan to increase tax incomes from agriculture, properties and retail businesses to generate additional revenue. Two major areas in the provincial jurisdiction — real estate and agriculture — had most of the untaxed wealth, which should be taxed by the provincial governments, the international lender said.

Read more: Pakistan’s GDP to rebound to 1.7% in FY23-24: World Bank

The real estate sector is also paying Rs402 billion tax in Pakistan than its actual capacity, the report said.

The bank also recommended that Pakistan should simplify its income tax structure, including aligning it for both salaried and non-salaried individuals, while ensuring progressivity.

It has also been recommended to increase the Federal Excise Duty on cigarettes to collect tax up to Rs268 billion from the sector.

Earlier, the World Bank advised cutting various subsidies to save money adding that 167 billion rupees can be saved from the Tariff Differential Subsidy (TDS).