World Bank Urges Pakistan for Tax System Overhaul

The World Bank has advised Pakistan to make significant changes to its tax system to enhance economic stability and growth. Recommendations include rationalizing Personal Income Tax slabs, streamlining the GST regime, and imposing a single premium rate of excise taxation on tobacco. The bank also suggests establishing a centralized regulatory body to improve coordination among different regulators.

According to the World Bank estimates, Pakistan could significantly increase its tax revenue by abolishing reduced tax rates and exemptions in the GST regime. The bank also proposes reducing the number of PIT slabs for the salaried class and increasing the Federal Excise Duty on tobacco to boost tax collection.

Dr. Nadeem ul Haque of PIDE emphasized the need for comprehensive reforms beyond taxation, addressing regulatory modernization, market liberalization, and improvements in various sectors. The World Bank highlighted the unsustainable economic model of Pakistan, stressing the importance of prioritizing reforms to tackle fiscal deficits and debt levels.

The reform agenda also includes proposals for public administration modernization, aiming to enhance governance efficiency and effectiveness. The World Bank's recommendations for tax system reform focus on rationalizing concessions, improving tax policy and administration, and increasing revenue collection efficiency.

In conclusion, the World Bank's call for extensive tax and governance reforms underscores the critical need for Pakistan to address its economic challenges and pave the way for sustainable growth and development.