*ISLAMABAD – **World Bank shows Pakistan the methodology for taxcollections of Rs 10 trillion without imposing new taxes.*
* Pakistan does not need to impose new taxes or hike tax rates because theexisting taxes have potential to achieve taxation targets, the World Bankhas said in its paper on Pakistan’s revenues, ARY News reported on Monday.*
The targeted revenues of Rs10 trillion annually could take the country’stax revenue potential to 26 per cent of GDP if tax compliance were raisedto 75 per cent, the lender said in its recently published document titledPakistan Revenue Mobilization Project.
The bank has called the 75 per cent tax compliance a realistic level ofcompliance for a lower-middle-income country like Pakistan in its document.
The Washington-based lender has revealed that Pakistan’s revenue gap haswidened from Rs3.3 trillion to Rs5 trillion, which is 26 per cent of thesize of its economy.
The World Bank has prepared the project information document of $1.5billion to approve a $400 million loan for tax reforms in the country. Theremaining $1.1 billion will be contributed by the government.
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The document states Pakistan’s tax authorities were currently capturingonly half of the revenue potential and the gap between actual and potentialreceipts is 50 per cent. As per the last fiscal year, Pakistan’s tax-to-GDPratio stands at 13 per cent of GDP.
The bank’s assistance of $400 million for the revenue mobilization projectwould be implemented by the Federal Board of Revenue (FBR) targeting tocontribute an increase in the domestic revenue by broadening the tax baseand facilitating tax compliance.
The $400 million credit for the project will come from the InternationalDevelopment Association (IDA), a World Bank affiliate.
The report advises for improvement in tax recovery and promotion of ahealthy tax culture.
