The Pakistan Tehreek-e-Insaf (PTI) will publish names of non-compliant debtors and strongly pursue large tax evaders besides launching a crack down on corrupt practices that promote tax evasion, said the tax experts being involved in preparation of PTI's manifesto before 2018 general elections. They have also vowed to increase the Federal Board of Revenue autonomy by reducing the influence of ministry of finance, said FBR sources.
They said the PTI will reform the FBR and increase tax net through a robust tax policy, efficient tax administration structure and effective enforcement mechanism. According to them, Pakistan's current tax to GDP ratio is significantly less than the ratio required to sustain our growing fiscal expenditure and to pay-off the massive national debt accumulated over the last decade. "Our tax policies have consistently been suboptimal and as a result have led to decrease in the tax net and disproportionately higher share of indirect taxes (60%) in tax revenue," they said.
There is a high average tax rate of 31% for businesses and corporations which hinders business growth by and large. The sources said the PTI has planned to champion the shift towards direct taxation as the primary source of tax revenue as opposed to indirect taxes.
They said plans have been finalized to incentives businesses to become a part of the formal economy, thus adding larger sources of tax income to the national exchequer. Reduction of taxes on businesses through sustainable initiatives and simplify tax assessment rules for corporations and small businesses is also on the PTI's agenda, they asserted.
They have expressed the hope that an integrate tax registration with associated processes would reduce the transaction cost of paying taxes. Also, the audit process would be improved by establishing risk engines and smart algorithms to identify potential taxpayers for audit, they added.