Pakistan Business Council (PBC) has said that government could generate an additional Rs300-400 billion in revenues within the present tax regime through better coverage and enforcement.
“Taxation measures should focus on documentation and broadening the tax base for direct taxes,” said PBC representatives at a panel discussion on the budget. Referring to studies conducted by PBC, they were of the opinion that presumptive basis of taxation may be replaced by net income tax earned basis. “Wealth tax in the old form need not be introduced but a tax on assets created out of untaxed income be levied,” they added.
The panelists included State Bank of Pakistan (SBP) former governor Syed Salim Raza, Siemens Pakistan CEO Sohail Wajahat Siddiqui Progas Energy Ltd and members of the media.
They were of the opinion in their recommendations that reforms were needed to address over-invoicing, false declaration and Afghan Transit Trade (ATT) misuse issues. It was noted that the use of IT tools in customs could help in this regard and gradual reduction in Custom duties on certain items will discourage these malpractices.
“Provincial governments do have the necessary mechanism in place to tax income on agriculture and its collection, compliance and enforcement systems need to be strengthened,” they opined.
Urban immovable property tax in major cities can substantially boost tax revenues of local governments if a more realistic valuation is in place alongside periodic surveys and assessments, they added.
PBC member panels, hailing from banking and corporate sector, said that expenditures can be reduced by restructuring of Public Sector Enterprises (PSEs) that will cut down on operating losses; by subsidy rationalization and targeting subsidies to the poor only through BISP.
The businessmen also recommended establishment of a Debt Management Authority as banking sector was not able to accommodate the rising levels of government debt. The PBC panelists also called for setting up of other new institutions such as the Infrastructure Development Fund and Mortgage Refinance Corporation to help the financing needs of the private investors in these sectors.
