ISLAMABAD: World Bank has asked Pakistan to tax agricultural and real estate sectors and recommended merging of salaried and non-salaried class thresholds for progressive Personal Income Tax (PIT).

Lender has projected that if agriculture income and properties tax is enforced properly then it could fetch 3 percent of GDP in tax collection on an annual basis, equivalent to slightly over Rs 3 trillion.

World Bank is also expecting its Executive Board to green light $ 350 million for Pakistan under RISE-II but no date for meeting is confirmed yet. At moment, salaried income threshold of Rs 600,000 on an annual basis is exempted while for non-salaried income, exempted limit is standing at Rs 400,000 per annum.

“Pakistan is in very difficult situation as its fiscal deficit is unsustainable. There is need to undertake combination of measures to generate revenues and reduce expenditures.

We are recommending to tax rich and wealthy while protecting the poor,” World Bank’s lead economist in Pakistan Tobias Haque said while briefing select group of reporters alongside WB’s Country’s Country Director Najy Benhassine.

“We recommend that Pakistan simplifies its income tax structure, including aligning income tax structure for salaried and non-salaried individuals ensuring progressivity.”

To question on whether lender recommended same income tax structure for salaried and non-salaried individuals, Haque backed idea but explained that change should be introduced over time, as part of broader tax reform.

Published in The Daily National Courier, October, 11 2023

Like Business on Facebook, follow @DailyNCourier on Twitter to stay informed and join in the conversation.