ICCI for reducing tax gap to improve Pakistan’s tax revenue

ISLAMABAD: Ahmed Hassan Moughal President, Rafat Farid Senior Vice President and Iftikhar Anwar Sethi Vice President, Islamabad Chamber of Commerce and Industry (ICCI) have called upon the government to take strong measures for reducing tax gap in order to realize the actual tax potential of Pakistan and improve its tax revenue.

In a statement here on Wednesday they said Pakistan has substantial potential to enhance tax revenue without imposing new taxes or increase tax rates, but the only requirement was to take steps to reduce tax gap and create a conducive environment for tax compliance.

They said a recent World Bank document titled “Pakistan Revenue Mobilization Project” has pointed out a 50 percent gap between actual and potential tax receipts in Pakistan while Pakistan’s tax revenue potential would reach 26 percent of GDP if tax compliance was to be raised to 75 percent, which was a realistic level of compliance for developing countries like Pakistan.

The ICCI office bearers said that government has reportedly developed a transformation roadmap for FBR that was a laudable step as the move envisioned to make tax department a semi-autonomous revenue authority with financial, managerial and operational autonomy.

They said Pakistan’s revenue performance has improved significantly rising from 9.5 per cent of GDP in 2011-13 to 13 per cent in 2017-18, which was appreciable.

However, they said that Pakistan could make substantial increase in tax revenue by promoting a tax compliance culture and reducing tax gap.

Ahmed Hassan Moughal said that Prime Minister had nominated Shabbar Zaidi, a chartered accountant and a tax expert from private sector for Chairmanship of FBR.

He said it was a good move to make FBR more dynamic and proactive tax collection agency. However, the federal cabinet has reportedly not approved his appointment as yet, which has created more confusion.

He stressed that government should settle this issue without further delay as FBR needed a dynamic leadership with drastic reforms in the organization to make it an efficient and effective tax collection body.