Agri, real estate income to be taxed: Tax-to-GDP ratio to be increased to 15pc by FY15

RECORDER REPORT

ISLAMABAD, The Federal and provincial governments have agreed to plug leakages, streamlining taxation system and effectively taxing agriculture and real estate to increase tax to GDP ratio to 15% by 2014-15, it is learnt.

Sources said that National Finance Commission (NFC) meeting presided over by Finance Minister Dr Abdul Hafeez Sheikh and attended by the representatives of the provinces recommended to increase the tax to GDP ratio to 15 percent by 2014-15. The provinces have been requested to effectively tax agriculture and real estate. The meeting also reviewed position of final distribution of divisible poll taxes for the fiscal year 2010-11 and for July-December 2011-12.

The federal government informed the meeting that various steps to increase the tax collection and streamlining the tax system have been taken. The regulatory duty has been abolished and federal excise duty is being phased out. The meeting was also informed that an interface with National Database and Registration Authority (Nadra) and excise registration authorities and other third parties is being devolved for broadening the tax base. The automation of business processes has been in the process and integration of sales tax and income tax functions by creating Inland Revenue Services has been completed.

The Federal Board Revenue audit and enforcement functions are being strengthened, tax exemptions are being minimized and evaluation of vibrant sectors of economy has been identified and their contributions to tax revenues are also being assessed.

The high-ups of the Finance Ministry reportedly informed the meeting that releases are being made as per revised system of financial control and budgeting with the objective of fiscal discipline at the federal government level. The review meetings are regularly held on monthly basis to avoid un-budgeted expenditures and there is ban on new recruitment, purchase of physical assets including vehicles.