Pakistan Tax Experts Propose Revenue-Boosting Reform Package

A group of prominent local tax experts in Pakistan have come together to propose a tax reform package aimed at boosting revenue generation in the country. The experts, hailing from the Pakistan Institute of Development Economics (PIDE) and the Policy Research Institute of Market Economy (PRIME), have outlined a plan that could potentially generate an additional Rs1.2 trillion in revenue over the next few years.

The proposed tax reform package focuses on lowering income tax rates and eliminating certain exemptions to create a more efficient and equitable tax system. By implementing these changes, the experts believe that Pakistan could see a net gain of Rs4.1 trillion in revenue without hindering economic growth.

One of the key recommendations put forth by the experts is the introduction of a uniform tax rate on all sources of income, including the removal of exemptions on agricultural income through a constitutional amendment. They also suggest increasing the taxable income threshold and reducing tax burdens on individuals, diverging from the recommendations of the International Monetary Fund (IMF).

Additionally, the experts propose lowering the corporate tax rate, abolishing taxes such as deemed rental income tax and turnover tax, and simplifying the withholding tax system. They emphasize the importance of broadening the tax base and eliminating the non-filer category to improve tax compliance.

Furthermore, the experts suggest measures to enhance customs revenue by eliminating exemptions and reducing import taxes. They advocate for ending sales tax exemptions on goods and services to align with international standards and improve revenue collection.

The tax reform package put forward by the local experts offers a comprehensive strategy to increase revenue collection in Pakistan while fostering an environment conducive to economic growth and compliance.