Reforms aims at raising tax-GDP ratio: Chairman CBR

KARACHI (November 22 2005): The Government wants a quantum jump in tax-to-GDP ratio by restructuring the tax policies, Chairman, Central Board of Revenue (CBR), Abdullah Yousaf, said here on Monday.

“The whole reforms agenda of CBR is primarily aimed at enhancing the tax-to-GDP ratio, which is lowest in the region, by broadening the tax net”, he told a group of newsmen at the Large Taxpayer Unit (LTU), Karachi.

He said that under the reforms agenda, CBR also wants to address the future needs of the country as all needs of infrastructure, defence etc could only be met through large revenue in the coming days, which would only be possible by plugging the loopholes in the tax system of the country and improving efficiency of tax collection machinery.

In this regard, he said, CBR was studying the tax models of other countries, which have similar problems but have larger tax-to-GDP ratio. “We have a narrow tax base, and badly require to enlarge this base by learning from the experience of other countries”, he added.

The CBR Chairman said that another area of this reform agenda is to simplify the procedures, bring transparency and improve efficiency to deal with the requirements of the time.

He said that to enhance tax-to-GDP ratio, the tax policies are being restructured. He said that that the prime objective of reforms agenda of CBR is to enhance tax-to-GDP ratio.

Meanwhile, in a presentation to Chairman CBR, it was informed that Large Taxpayers Unit (LTU) Karachi is preparing a list of Withholding Tax (WHT) agents on the basis of quantum payments.

Letters have been sent to these agents to introduce new format of statements as part of educating them while workshops with collaboration of taxpayers were organised to help them in correct use of the software of WHT.

Besides, filed audits are being undertaken to keep the agents updated about changes in the law and encourages voluntary tax compliance.

The presentation, a copy of which was made available to Business Recorder covers wide-range of issues pertaining to working of LTU Karachi. Director General LTU Karachi Malik Bashir and other officials attended the meeting.

On the reasons for refunds in banks, it pointed out that heavy losses on account of non-performing loans under prudential regulations of State Bank of Pakistan (SBP) is a big cause of huge refunds claims in the returns.

The efforts of the department to reduce refunds through addition of interest in respect of non-performing debts are quashed by the courts.

It cited the slow promotions for de-motivated work force while scarcity of vehicles a main hurdle in operational activity in LTU. Chairman CBR was informed that the exercise of destroying old record as per CBR policy is being vigorously pursued.

“The net collection of LTU stood at Rs 10,420 million upto October of current fiscal, showing a rise of 30 percent against same period of previous year”, the presentation revealed.

It also covered matters pertaining to audit, tapping potential revenues, dispute resolution through prudent legal policy etc.

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