Tag Archives: GST

Pakistan’s tax-GDP ratio is at the same level as Ethiopia and Afghanistan – Shahid Kardar

Tax reform agenda for next government

By Shahid Kardar

Pakistan has one of the lowest tax to GDP ratios and, even considering developing countries alone, it is in the bottom ranked nations in terms of the proportion of population registered as taxpayers – less than 5 percent. of household population. There is rampant tax evasion, partly with the collusion of the official machinery. Whereas 3.1 million people have the National tax Number, a mere 1.2 million filed an income tax return in 2010/11. What is even more startling is that of 47,800 companies that have NTNs, less than 16,800 filed an income tax return against 400,000 industrial electricity connections.

As admitted by FBR, there is a tax gap of 79 percent. (the difference between potential revenues under the existing system and that actually collected). Revenues can be raised through broadening of bases, improving the equity of the tax regime, incentivising documentation, checking evasion by embracing a zero-tolerance policy, checking harassment of, or collusion with, taxpayers by simplifying tax returns and making FBR a faceless bureaucracy, with interaction between taxpayers and tax officials limited through greater reliance on automated computerised systems.

The general tax reforms would include taxation of all incomes of same levels equally irrespective of source, with a swift reversal of the travesty of the recent amnesty granted to trading in shares. There is also need for legislation that will render all Benami Transactions illegal and subjecting all cabinet members, who should all be taxpayers, to detailed tax scrutiny throughout period of office, and they should all be taxpayers. The tax returns and Wealth Statements of all parliamentarians and holders of key public offices and their spouses (including Secretaries, Chief Justices, Chief of Army Staff, Governor State Bank, Auditor and Attorney Generals) should be public during period of office and one year thereafter. Finally, following good results of tax mobilisation initiatives, individual and corporate income tax rates and the GST rate could be lowered under a phased programme.

 

The specific reforms under different tax heads would be the following: For Income Tax: Greater dependence needs to be placed on technology and through that on the CNIC for tracking commercial transactions to identify potential tax evasion/evaders, including movements in bank accounts of large deposit holders. The FBR should periodically reconcile the property tax registers of all provincial governments, names of credit card holders and members of private clubs with those allotted National Tax Numbers, for the system to generate notices to non-filers. All presumptive taxes should be replaced by withholding taxes (which presently contribute 60 percent. of income tax revenues). And the rates of all withholding taxes should be increased by at least two percentage points as a revenue enhancing measure, to incentivise documentation and penalise those trying to avoid capture in the tax net. ….

Read more » The News

Pakistan nears bankruptcy, yet its Army poaches most of the resources of the nation

As Pakistan nears bankruptcy, patience of foreign lenders wears thin

BY GRAEME SMITH

ISLAMABAD — A terrifying kind of mathematics has become popular among aid workers, analysts and others who spend their lives tracking the fate of Pakistan. It’s a back-of-the-envelope calculation about how the country will get through the coming years without declaring bankruptcy: take the country’s foreign debt ($53-billion), add interest, subtract the $1.8-billion that won’t arrive as scheduled on Jan. 1 from the International Monetary Fund because Islamabad failed to meet loan conditions. Add the staggering cost, perhaps $10-billion, of rebuilding after summer floods.

The numbers seem bleak. The government floated the possibility last week of running a deficit for the coming year of $15-billion.

Islamabad’s latest plan to raise revenue, a reformed tax law, has become bogged down by stubborn opposition parties, front-page criticism and street protests. The cabinet’s economic team is threatening to quit.

Pakistan needs a bailout. But is the country still a good investment?

“That’s the conversation people are having now, about whether you’d be throwing good money after bad,” said Mosharraf Zaidi, a development expert and policy analyst based in Islamabad.

The international community has accused Pakistan of poor financial management for years. Cables recently posted by the website WikiLeaks show a U.S. intelligence official complaining in 2008 about the country’s preference for spending money on strategic military hardware instead of development: “Despite pending economic catastrophe, Pakistan is producing nuclear weapons at a faster rate than any other country in the world.” …

READ MORE : Globe and Mail

Sindh – very sad state of affairs!

Centre wins over Sindh on GST collection – By Khaleeq Kiani

ISLAMABAD, Nov 25: In a major breakthrough, the Sindh government has agreed to surrender its rights over collection of general sales tax on 10 crucial services to the Federal Board of Revenue for one year, paving the way for the smooth adoption of new tax laws by four provincial assemblies. …

Read more : DAWN

Development of Sindh: Shallow Promises

– Mushtaq Rajpar

PPP ruled Sindh government is about to present third budget of their tenure. Be ready for new promises, pledges and schemes. Are you interested listening and read all that? What did Sindh government achieved in the current outgoing fiscal year 2009-10?

People of Sindh want to know. Can Sindh government publish a Development Review or Economic Review and inform the public on state of economy, development and projects announced last year in the budget.

Rs 113 billion were allocated for development, including Rs 16 billion by federal government. How much actually has been achieved?

Newspapers report suggest development funds were not utilized more than 42%. This is height of negligence and ineptness of an elected government. Sindh continues to live in backwardness; people live under hard socio-economic conditions.

Budget 2009-10

· Rs. 113 development out lay included Rs 75 billion ADP: Where did this money go?

· The federal government was to be asked to settled the issue of Rs204 billion arrears of GST on services. Did they get arrears back?

· Rs. 2 billion were allocated for Thar Coal Development