It is also recommended to formulate a long-term commercial tariff strategy and align the gas tariff for consumers with the cost of supply.
World Bank asks Pakistan for tax reforms. The World Bank on Thursday presented important demands to the Pakistani government for tax reforms and the elimination of exemptions in duties and sales tax.
The World Bank, while releasing its report on Pakistan, has recommended the government reform the tax system and eliminate sales tax exemptions to promote economic and social improvement.
The report calls on the government of Pakistan to formulate a national policy for child development and advocates reducing subsidies on energy and other commodities while reallocating these funds to public welfare initiatives.
The report suggested that “the government should implement austerity measures and promote public-private partnerships in state-owned companies.”
The World Bank report recommended the Pakistani government restructure the tax system, eliminate duty and sales tax exemptions, and suggest new taxes on real estate and the agriculture industry.
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It is also recommended to formulate a long-term commercial tariff strategy and align the gas tariff for consumers with the cost of supply.
Last year, the World Bank revealed that Pakistan is collecting lesser tax than its actual capacity.
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.
The real estate sector is also paying Rs402 billion tax in Pakistan than its actual capacity, the report said.
