Pakistan has a history of turning to international financial institutions IFIs for a solution to its long drawn tax issues . The World Bank Asian Development Bank ADB IMF and the UKs FCDO have been supporting tax reforms at the federal and provincial levels for years .
The IMF programme had envisaged an increase in tax revenue mobilisation by four to five per cent of GDP through reforms of personal and corporate income taxes and GST to bring it close to the tax level in lower and middleincome countries at pc to pc .
At the end of the programme notwithstanding an increase of absolute terms Pakistans tax collection as a ratio to GDP declined. At the same time a lot boils down to the lack of political will loopholes in tax policy rooted in fiscal weaknesses and corrupt practices within the tax system .
Here I propose a fivepoint agenda that confronts the underlying problems as the foundation of various facets of reform. The country needs tailored strategic solutions to our tax woes that address the underlying issues. The principle of equity both horizontal and vertical should supersede all other tax objectives.
It was delusional to expect the system of voluntary tax compliance on which TARP was centred to deliver to deliver in a country where it is hard to implement procedures of strong and effective tax audits enforcement and strict penal actions against tax evaders.
In Pakistan, the FBR needs to deliver. The FBR should be restructured into a professional organisation with an independent board of eminent personalities. It also needs to be restructure into an independent and tax. It needs to act as an independent.
It is needed to act. It has to be a strong and appropriate tax audits. It should act as a powerful and effective audit. It must act as well as an effective audit mechanism in place.
