ICCI for reducing tax gap to realize actual tax potential

ISLAMABAD, May 8 (APP):Islamabad Chamber of Commerce and Industry (ICCI) Wednesday 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.

The ICCI, in a statement, said Pakistan has substantial potential to enhance tax revenue without imposing new taxes or increase tax rates, but the only requirement is to take steps to reduce tax gap and create a conducive environment for tax compliance.

ICCI President Ahmed Hassan Moughal 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 Gross Domestic Product (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 the government has reportedly developed a transformation road map for Federal Board Revenue (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 Pakistan could make substantial increase in tax revenue by promoting a tax compliance culture and reducing tax gap.

Ahmed Hassan Moughal said the prime minister had nominated Shabbar Zaidi, a chartered accountant and a tax expert from private sector for FBR chairmanship.

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 the 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.