The World Bank has expressed concerns about Pakistan’s inadequate taxcollection, highlighting that the country’s tax-to-GDP ratio is only 11.6%while it should ideally be at least 15% for progressive nations.
Despite various reform attempts, tax collection in Pakistan remains thelowest in the region, according to the World Bank report. To address thisissue, the World Bank recommends increasing tax collection from key sectorsand eliminating exemptions on income tax, sales tax, and customs duties.
They also suggest linking property tax rates to market values by connectingland ownership records with national identity cards and national taxnumbers. Additionally, the World Bank proposes implementing a standard GST(General Sales Tax) rate of 18% on various goods and bringing individualsearning less than 600,000 rupees annually into the tax net.
Furthermore, the report advises imposing additional taxes on agriculture,property, real estate, retail, and the cigarette sector while reducingtaxes on luxury items.
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The World Bank underscores that Pakistan’s financial stability hinges onimplementing revenue reforms and addressing the complexity of the corporateincome tax system, which currently allows many companies to benefit frompreferential tax schemes.
