World Bank urges Pakistan for unified tax agency

The recent demand by the World Bank for Pakistan to establish a unified General Sales Tax (GST) collection agency has sparked a critical debate within the country. The objective of streamlining tax collection and broadening the tax base is seen as desirable, but the proposal raises concerns due to Pakistan's unique economic and political landscape.

One major issue is the devolution of power from the federal government to the provinces through the 18th Amendment, which included the transfer of authority over several taxes, including aspects of GST. Implementing a unified agency in such a decentralized environment could lead to federal overreach and infringe on provincial autonomy.

Furthermore, the success of a unified agency depends on Pakistan's current tax infrastructure. Addressing issues like overlapping service taxes and ensuring seamless interoperability are crucial before embarking on such a reform.

Looking at examples from other countries, such as Malaysia and Brazil, can provide insights into efficient administration and increased revenue collection. However, Pakistan must tailor its approach to its specific context, considering factors like existing tax infrastructure and federal-provincial cooperation.

The World Bank's emphasis on mobilizing revenue from underutilized sources like agriculture and real estate taxes faces challenges due to historical exemptions and enforcement issues. Implementing effective taxation in these sectors requires a comprehensive strategy beyond just a unified agency.

In conclusion, while the goals of streamlining tax collection and broadening the tax base are commendable, Pakistan must approach the establishment of a unified GST collection agency cautiously and consultatively, taking into account its economic and political realities.