ISLAMABAD: Nothing has been done to reduce tax collection gap which is necessary to increase tax-to-GDP ratio. This was stated by Islamabad Chamber of Commerce and Industry (ICCI) President Yassar Sakhi Butt while talking to a group of traders and businessmen from the federal capital.
Mr Butt said the tax gap should be narrowed down with consistent efforts and reform process as the government fixes its economic targets on the basis of revenue collection, Therefore, there is a dire need to reduce tax gap by raising revenue collection.
He expressed concern over the World Bank report that tax gap which was 69 per cent in 2008, had now gone up to 79 per cent which was the highest-ever figure.
He emphasised that true tax should be exploited in the country and said that fair and equitable tax policies were essential for revamping tax collection system and pulling the economy out of mounting debt.
Proactive measures should be introduced to plug the leakages and improve the refund system in tax departments which would also bridge the gap by bringing the evaders under the tax net, he maintained.
ICCI president said that tax revenue was less than 10 per cent of Pakistan’s GDP, which was extremely low while in India tax revenue accounted for 18 per cent of the GDP.
The ICCI members suggested that government should analyse the tax models of Sri Lanka, Turkey, Brazil and Taiwan, where tax-to-GDP ratio had shown major jump and revenue collection had increased substantially.
They noted that country needed a free and fair taxation policy to raise revenue; therefore, government must develop an environment of trust to build the confidence among the taxpayers.