CBR offers help to provinces to improve farm tax ratio

In order to improve tax ratio in the agriculture sector, the Central Board of Revenue (CBR) has offered assistance to provinces. CBR Member (Audit) Abdul Razzak stated this at pre-budget seminar, organised by the Income Tax Bar Association (ITBA) here on Tuesday.
He said the contribution of agriculture sector in GDP is over 20 percent and its contribution to taxes is only 1.1 percent. This small size taxation could be improved by implementing latest tax system adopted by the CBR, he added.
The low agriculture tax due to wide-ranging tax exemption granted to the agriculture sector, narrow tax base, low compliance and enforcement, and constitutional constraint, he said.
Another disturbing area in tax compliance is the services sector. The contribution of this sector is only 33 percent compared to its share of over 50 percent in GDP, he said.
Razzak said at a change of mindset needed to achieve reform targets because only changing the system was not enough. He said that the CBR chairman was keenly monitoring the refund issues and all efforts were deployed on early liquidation of refunds.
The tax department is engaged to increase tax-base and reducing tax rate, particularly in income and sales tax sides, he said and added that these two taxes were the future taxes because in WTO regime customs duties would further decline.
He said that Pakistan has lesser tax-to-GDP ratio in the region, which stood at 10.5 percent. The CBR was working on different sectors and their tax compliance to improve tax-to-GDP ratio.
Razzak stressed the need for improving the documentation of economy that would help identify new taxpayers and increase revenue collection. Due to reform policies, the CBR had collected Rs 599 billion up to March 2007 in this fiscal year, which indicates the budgetary target of Rs 835 billion achievable, he said.
About audit, he said that it was right time to start audit because enough time was given to universal self-assessment scheme USAS. He said that in the world wherever the USAS is implemented the audits were parallel conducted to check the transparency.
He said that the CBR would identify loopholes in tax compliance through audit, which had been started from Lahore recently. Ali A Rahim, Finance Secretary ITBA; Adnan Mufti, FCA presented working paper on upcoming budget.
On the occasion, Asrar Raouf, Commissioner Income Tax, Munawar A Sheikh, President ITBA, Haider Ali Patel, Vice President ITBA and Shahab Ahmed, Secretary General ITBA were also present.