Pakistan Pushed to Change Taxes
November 29, 2012 Taxation in Pakistan
ISLAMABAD – In order to meets it own financial targets next year, Pakistan needs to broaden tax base and make tangible steps to fight the occurrence of tax evasion.
On November 29th the International Monetary Fund (IMF)released a Public Information Notice (PIN) with a summary of the results of the recent evaluations of the economy and tax system of Pakistan, saying that it is critical for Pakistan to take active measures to reduce its budgetary shortfalls in order to provide the resources and stability needed to encourage sustainable economic growth and to reduce poverty levels in the country.
The IMF explained that a key step that should be taken by Pakistan is to broaden the country’s tax base by expanding the scope of primary taxes such as consumption and income taxes.
The government was also urged by the IMF to reduce the number and the extent of tax subsidies currently available to corporate and individual taxpayers.
Pakistan was also advised to expand more effort to address the widespread problem of tax evasion in the country, as it is currently estimated that only 1 percent of all Pakistani citizens regularly meet their tax obligations, and in the last 25 years no tax cheats have faced persecution for their evasion.
Along with the call to stamp out the rampant tax evasion the IMF also encouraged the government of Pakistan to reconsider its currently planned tax amnesty, due to shortfalls in the proposed plan.