ISLAMABAD, Aug 10: The World Bank has urged the Central Board of Revenue to increase the tax-to-GDP ratio by bringing potential taxpayers in the tax net to raise maximum revenue.
Speaking at a briefing on "tax administration reform programme" here on Tuesday, World Bank senior financial sector specialist Mudassir H. Khan said the tax revenue in relation to GDP had remained stagnant at 11-13 per cent during the last decade.
Mr Khan regretted that with revising the GDP base, the tax-to-GDP ratio further decreased to 9.3 per cent during the fiscal year 2003-04 from 9.6pc in 2002-03. The decline in GDP ratio calls for an effort to widen the tax base to mobilize additional resources and bring the ratio on a par with other countries, which is more or less at the same level of economic development stage.
The briefing was organized by the CBR and the World Bank to apprise the donor agencies, media persons, economic and commercial counsellors of different countries of the reform project of the tax administration to be completed by the year 2007.
Answering a question, tax policy and reforms member M.S. Lal said the revenue would increase by 0.2 per cent of GDP per year following the reforms in the tax administration. However, he did not give a clear figure in terms of rupee to show the actual increase in the revenue due to reforms in the tax administration.
In reply to another question, he said the number of taxpayers would be increased to three million in the next three years. However, he did not elaborate the strategy as to how these numbers could be achieved.
While the number of live taxpayers, who file their returns with the income tax department, remained stagnant at around one million in the last year. Chairman M. Abdullah Yousuf said the CBR would seek autonomy for the tax administration following seeking opinion from the relevant stakeholders. He said the autonomy would help the tax authorities easily implement the reform agenda.
In reply to a question, M.S. Lal said the autonomy would also stop political interference and interference from other sources in the affairs of the tax administration. He said the demand for autonomy was made following studying the various tax modules currently in practice in various countries.
Answering a question, the CBR chairman said the reforms were aimed at creating a friendly environment for foreign investors. Customs administration reforms project director Azhar Majeed Khalid said that automation in the customs would result in reduction of average dwell time of containers to under 24 hours of the arrival of a vessel.
It will further reduce average customs' clearance time to under four hours, he added. The total cost of the tax administration reforms was estimated at $153 million. Of these, 122.433 million will be provided by the World Bank.
