APBFs proposal for reducing tax rate and curtailing parallel economy

ISLAMABAD, August 13 (Online): The All Pakistan Business Forum has proposed the government to reduce tax rates and curtail parallel economy with a view to widen the tax base, as country’s tax-to-GDP ratio has dropped to a record low of almost 9% during 2019-2020 compared to 11.1% in 2017-2018, because of flawed tax policy measures.

APBF President Syed Maaz Mahmood called for broadening of tax base and creating jobs through industrialization, providing a competitive edge to Pakistan’s products in global markets through liberal investment policy and infrastructure development, as tax-to-GDP has been suffering a constant decline during 2019-2020 despite imposition of 17 percent sales tax on five major export sectors in budget and other taxation measures to the tune of Rs735 billion.

He said that the FBR’s policy of heavy taxation and over taxation on certain sectors did not provide any relief to increase revenue collection during 2019-2020, as harsh enforcement measures such as the condition of computerized national identity card numbers of the unregistered buyers further damaged the relationship between the tax collector and the taxpayers.

According to reports, calculations of the GDP, inflation, rupee-dollar parity and additional taxation data indicate that the tax-to-GDP ratio was 9.5 percent in 2019-2020; 10.1 percent in 2018-2019; 11.1 percent in 2017-2018; 10.6 percent in 2016-2017; 10.7 percent in 2015-2016; 9.4 percent in 2014-2015; 9.7 percent in 2013-2014; 8.7 percent in 2012-2013; 9.4 percent in 2011-2012, and 8.5 percent in 2010-2011.

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