KARACHI, March 25: The Central Board of Revenue (CBR) has chalked out a plan to increase the tax-to-GDP ratio by at least 1 per cent in next five years, which means additional revenue of $1.25 billion.

This was stated by CBR chairman Abdullah Yousuf while speaking at the pre-budget seminar organized by the Management Association of Pakistan (MAP) here on Saturday.

He said this ratio was currently hovering around 10 per cent, which is the lowest in the region as well as in the world. “The neighbouring countries have about 15 to 18 per cent tax-to-GDP ratios,” he added.

Calling it a challenge, Yousuf said that Pakistan had agreed with the World Bank to raise this ratio by 0.2 per cent every year.

He said that in the past all the governments had tried to increase this ratio, but they could not do it. On the contrary the previous governments had to revise down their tax collection targets and yet failed to achieve the revised targets, he noted.

He said that revenue collection targets were being surpassed every year and this year too the collection was ahead of the target.

Citing reasons for this rise, he said that fast growing economy was the major reason behind the increase in tax collection.

He said that the revenue collection had to increase to finance the infrastructure development as the rising industrial and commercial activities would put burden on the existing infrastructure facilities.

“We have to look at our tax collection system, rules and procedures and simplify and fully automate the system to enlarge tax base”, Yousuf said.

He pointed out that the government was trying to evolve a simpler and transparent system. “We are cutting rates, facilitating taxpayers, eliminating pendency in tax appeal cases, expediting refunds, etc.,” he added.

He said that 14 regional offices were being set up in the country besides the existing three large tax payers units to centralize tax collection by December 2007. In addition, 80 tax facilitation centres were also being set up in smaller towns which would be connected to the main system to facilitate taxpayers, he added.

He said that all these centres would collect income tax, sales tax and central excise duty.

Responding to a demand to further cut tax rate, he said that there would be a uniform tax rate of 35pc for all companies in next couple of years and added that listed companies would get an additional cut of 1pc in tax rate.

Referring to pendency of tax appeals, the CBR chairman said that there was no waiting time for new appeals as more than 60,000 cases of direct taxes and over 20,000 cases had been decided.

He said that the CBR had requested the Supreme Court to put up a special bench. This request was agreed and till now 900 out of 1,150 pending cases had been decided and remaining cases would be resolved by end of this year.—APP