WB directs Pakistan to level income tax for salaried, other classes

Islamabad: The World Bank has directed Pakistan to make personal income tax equal for salaried and non-salaried classes and remove loopholes in the general sales tax system and tax the tobacco industry at a single premium rate.

The World Bank has also recommended that all types of regulators should be brought under one big body and under a centralised system to improve coordination between the center and the provinces instead of adopting a fragmented approach.

A World Bank estimate shared with participants at a conference titled "Urgent Reform Agenda: Beyond the IMF" revealed that the total contribution of general sales tax to Gross Domestic Product (GDP) currently stands at 2.7 percent. And if all kinds of reduced taxes and exemptions and other loopholes are removed, it has the potential to become 6.53 percent of the Gross National Product (GNP).

The World Bank also suggested that introducing a single premium rate of federal excise duty on tobacco would increase the share of tax revenue from the tobacco industry in the GNP from 0.19 percent to 1.09 percent. It is said that the tax collection may increase from 1000 billion.

On the other hand, Pakistan Institute of Development Economics (PIDE) Vice Chancellor (VC) Dr. Nadeem-ul-Haque said that the reform agenda is not only about tax, that Pakistanis are not tax cheats. The colonial institutions are continuing their illegitimate power through weird laws, which basically do not allow the markets to function smoothly.