Experts call for ‘deep-rooted’ tax reforms

Parvaiz Ishfaq RanaPublished September 14, 2019

Economic experts say higher tax collection can only be achieved with a growing economy and similarly devaluation of the rupee alone cannot help increase exports without broadening the industrial base. — AFP/File

KARACHI: Economic experts say higher tax collection can only be achieved with a growing economy and similarly devaluation of the rupee alone cannot help increase exports without broadening the industrial base.

Speaking at the inaugural session of three-day international workshop on best global practices of VAT/GST, organised by International Bureau of Fiscal Documentation (IBFD), Netherlands in collaboration with Sindh Revenue Board (SRB), they were critical about a large number of taxes being collected with high tax rate and suggested for early rationalisation of tax rates and reduction in number of taxes.

They further said that by devaluation of the rupee exports could not be enhanced therefore it was equally important to consolidate industrial activity for achieving growth in exports.

The industrial base of the country on the contrary has shrunk rather than recording growth, they observed.

Former finance minister Shaukat Tareen expressed deep concern over the current economic condition and suggested there was urgent need for introducing deep-rooted reforms with structural changes in tax collection if revival of the economy has to be witnessed.Tareen was critical that the National Finance Commission (NFC) award and said this made central government financially weak because under distribution formula more resources go to provinces.

He further said that an economy with huge frontload of taxes cannot grow and as such there was an urgent need to reduce expenses, rationalise taxes and increase resources if sustainable growth has to be achieved.

Unfortunately, he said, the manufacturing sector which contributes up to 18 per cent in GDP has to contribute up to 80pc in revenue collection. Therefore, provinces must impose agriculture tax to ensure equitable contribution in tax collection.

Institute of Business Administration Dean Farrukh Iqbal said that growth in tax collection could only be achieved in growing economy therefore he felt that economic growth was more important than growth in tax collection and the government was more focused on later.

He further said that presently around 50 taxes are being collected and there is a need to reduce the number as well as cut in rates for which tax system has to be re-designed.

SRB Chairman Khalid Mahmood said for the last three consecutive fiscal years the board had been recording revenue collection growth of around 28 per cent.

Published in Dawn, September 14th, 2019

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Comments (8) Closed

Adi

Sep 14, 2019 09:00am

Stop the domestic and international air travel for non-filers and see the change. But half of MNAs and MPA families would be affected so why take the most effective step ! Who cares for the country anyways!

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SMI

Sep 14, 2019 09:30am

Why people pay for the economic crime did by Ministers? We are paying but in return what we are getting health insurance? Good education? Clean water ? Justice ? Good infrastructure? Many hospitals ? Clean environment What you are providing ? We will pay double but first provide mentioned facilities for 3 years then ask for tax reform

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Mansur Ul Haque

Sep 14, 2019 05:07pm

Very true higher tax collection can be achieved by growth economy. But no harm in expanding tax net and collecting tax who are stealing tax. How long you can keep on increasing tax on existing tax payers . In fact.rate of tax and number of taxes must be reduced. But under the present situation that is not possible. Recently government has refunded pending sales tax to exporters. This will give breather to starved industrialist and enhance confidence of exporters on government. Working of FBR needs to be improved. Awareness in general public must be created that taxes should be deposited in national exchequer instead of paying heavy fees to consultant and giving bribe to corrupt. Believe you me tax evaders pay huge amount to corrupt just to save Little portion of tax. Exporters should be facilitated at top priority and unnecessary intervention of tax, labor, EOBI, Social Security, education department etc. must be reduced. Pakistan is our country. Let's work together for it's welfare.

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M. Saeed

Sep 14, 2019 05:54pm

We must improve the quality of our export products much above the competitors and use our favorable exchange rates to our advantage. Hyperbolic increase in export earnings would come naturally.

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kks

Sep 14, 2019 06:28pm

Growth is the only way to increase revenue of the Government. Further, procedures must be simplified and Tax rates reduced to bring more and more in the tax net. Relying, only on administrative measures will not help achieve revenue targets. Growth is the key word in Economy.

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Sameer

Sep 14, 2019 09:35pm

Sindh has the best potential to have a uniformly neutral and effective taxation system that is wide spread and not to hard on the pocket. Unfortunately, to implement that, PPP needs a complete change in the current ruling lot.

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Safi

Sep 14, 2019 10:44pm

@Adi, Such measures are unconstitutional. One of the fundamental rights guaranteed under the constitution is our right to spend our money on whatever we see fit as long as it is legal.

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Big Bird

Sep 14, 2019 11:27pm

Experts call for ‘deep-rooted’ tax reforms. The alternative is to double the sales taxes on imported goods. That is what small poor countries do, and must do.

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