ISLAMABAD, May 17: Budget planners have been directed by the government to identify new sources of revenue and propose ways to tap them to generate funds for new development projects.

Informed sources told Dawn on Wednesday that rapid development critically depended on substantially increasing the tax-to-GDP ratio and on promoting a just and non-regressive taxation regime.

A major increase in public expenditure would be required to enhance the scale of development activities and education in general for which the government needed sizable additional resources.

Sources said that the main contours of the various macroeconomic models in 2006-07 and beyond would be the acceleration of GDP growth with stability, through rapid productivity increase and industrialisation of all activities whether agriculture, manufacturing or services.

The new budget would also focus on increasing investment and national savings rates so as to attain higher growth with lessened dependence on foreign resources and ways and means to keep inflation within a reasonable range.

When contacted Central Board of Revenue chairman Abdullah Yusuf said that there was no doubt that the government needed more resources to finance maximum number of development projects.

“The focus of the new budget would be to plug various gaps to manage new resources”, he said, adding that the CBR was looking for “major gains” in the budget 2006-07 to help implement the government’s development strategy.

He said that the tax-to-GDP ratio will have to be increased in the next budget and that the CBR was engaged in mobilising additional resources without coercing the taxpayers.

“The tax-to-GDP ratio will reach from 9 per cent to 9.4 per cent by the end of the current financial year”, the CBR chairman said.

For 2005-06, he said that efforts were being made to further increase this tax-to-GDP ratio as was being expected by the higher authorities.

Responding to a question, he said that taxation system was being further streamlined to provide necessary facilities to the taxpayers in the next budget.

He agreed that still various segments of the society needed to be brought in the formal tax net but without creating difficulties for the people.

The CBR had been trying for the last few years to bring in new taxpayers for which certain success was achieved by the board. “This process will continue in 2006-07 so that maximum resources could be collected”, Yusuf said.