Pakistan Needs Tax Overhaul

June 12, 2011 Taxation in Pakistan

Tax overhaul for PakistanPakistan needs to inspect its tax system and make changes to its tax collections process, in order to boost national tax revenues and ensure that tax compliance is more affordable and more friendlier for taxpayers.

In a press release issued on June11th, the Islamabad Chamber of Commerce and Industry (ICCI) said that the Pakistan government needs to address several issues in its tax system, so the revenue goals set out in the national annual budget can be achieved.

In the statement ICCI President Mehfooz Elahi said that direct tax collections are unlikely to match the Pakistan government’s set goals for the 2011 – 2012 financial year, and the country’s fiscal deficit is sure to widen further as a result. He added that if any extra pressure is exerted by the government on tax authorities to raise tax collections, then there could be an increase in the occurrence of corrupt practices amongst tax officials, and harassment of taxpayers by tax agents.

Offering a solution to increase compliance in Pakistan, Mehfooz Elahi suggested that the government should look into reforming the tax collections and filing process, to foster greater public trust in tax authorities, eradicate the occurrence of corruption, and make the system “fair”. In order to boost the tax receipts, it was also suggested that the government re-examine the current tax system and rates of tax, and attempt to widen the tax base, making it simpler and more equitable for taxpayers. However, the ICCI president also said that if any changes are carried, they need to be implemented in a realistic and systematic manner, in order to ensure their long-term efficiency.