Friday, January 21, 2022

Provincial governments have crucial role to play for improving tax-to-GDP ratio: SBP

KARACHI: The State Bank of Pakistan (SBP), in its view on the provincial tax authority, has urged the provincial governments to rationalise the incentive structures.

The bank declared that no serious tax effort could be observed from provincial tax collecting authorities until now. The tax collectors have been relying on the old tax base and have been collecting only property, stamp duties and/or motor vehicle taxes.

The state bank further witnessed that these agencies have been struggling to include high potential sectors and have been resisted with certain issues regarding the collection of the agricultural income tax.

It identified that these agencies have failed to identify individuals with net incomes above the threshold level. Due to differences in the GST rates on services between provinces, the taxation mechanism has gotten very complicated for firms that operate across the country.

Importantly, it has been noted that the provincial governments have a more crucial role to play for improving tax-to-GDP ratio, and that the provincial governments have to expand and diversify the revenue base, and tap revenue resources equitably.

“The provincial governments have the constitutional authority; all they need is a serious commitment to support the sustainable growth objective.”

FBR directs staffers to not make contacts with taxpayers

On the other hand, the Federal Board of Revenue (FBR) issued directions to all officers and officials of the FBR headquarters and its field formations to not contact any taxpayer or businessman in any form, including physical visit, telephonic, mobile calls, SMS or email, except when legally authorised to do so.

The step has been taken to do away with fake communication from some quarters and to build confidence level of taxpayers, according to a press release issued by the FBR.

This policy shall come into force from November 1, 2019, and any officer or official found indulged in such activity shall be proceeded against strictly under the Government Servants (Conduct) Rules, 1964 read with Government Servants (E&D) Rules, 1973.

These directions shall apply to all formations of the FBR being Inland Revenue (Income Tax, Sales Tax and Federal Excise Duty) and Customs. Taxpayers, business community and trade bodies are requested to assist in implementing this policy by reporting to the FBR any contravention of these directions.

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