ISLAMABAD: The World Bank has issued directives to Pakistan, urging the equalization of personal income tax rates for both salaried and non-salaried individuals. Additionally, they have called for the elimination of loopholes in the general sales tax system and advocated for a unified premium rate for taxing the tobacco industry.
Furthermore, the World Bank has recommended the consolidation of all regulatory bodies under a centralized system, aiming to enhance coordination between the federal government and provincial authorities, thus moving away from a fragmented approach.
During a conference titled “Urgent Reform Agenda: Beyond the IMF,” a World Bank estimate highlighted that the current contribution of the general sales tax to the Gross Domestic Product (GDP) stands at 2.7 percent. By eliminating various tax exemptions and loopholes, this figure could potentially rise to 6.53 percent of the Gross National Product (GNP).
Regarding the tobacco industry, the World Bank proposed the implementation of a single premium rate for federal excise duty, which could significantly boost tax revenue from the sector, potentially increasing it from 0.19 percent to 1.09 percent of the GNP, with projected tax collection reaching 1000 billion.
Contrarily, Dr. Nadeem-ul-Haque, Vice Chancellor of the Pakistan Institute of Development Economics (PIDE), emphasized that the reform agenda extends beyond taxation, highlighting that Pakistanis are not tax evaders. He pointed out the challenges posed by colonial-era institutions and outdated laws, which hinder smooth market operations.
