Pakistan likely to impose new taxes worth Rs 737 billion on World Bank demand
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World Bank has highlighted that Pakistan is currently collecting less tax revenue than it has the potential to collect. The report indicates that Pakistan falls short of collecting Rs737 billion in taxes.
The World Bank recommends that Islamabad eliminate all tax exemptions to alleviate the burden of debt. Additionally, the World Bank suggests increasing tax revenues from sectors such as agriculture, real estate, and retail businesses to generate additional income.
The report emphasizes that the provincial governments should focus on taxing previously untaxed wealth in areas like real estate and agriculture. In particular, it notes that the real estate sector in Pakistan is contributing Rs402 billion less in taxes than it could.
Furthermore, the World Bank recommends simplifying the income tax structure, making it consistent for both salaried and non-salaried individuals while ensuring a progressive tax system. Lastly, the bank suggests raising the Federal Excise Duty on cigarettes to generate up to Rs268 billion in tax revenue from this sector.
Additionally, it advises reducing various subsidies, with the potential to save 167 billion rupees from the Tariff Differential Subsidy (TDS).
