http://www.brecorder.com/index.php?id=5314...m=&supDate=

President approves 10-year taxation plan

SOHAIL SARFRAZ

ISLAMABAD (February 23 2007): President General Pervez Musharraf has approved Central Board of Revenue (CBR) 10-year taxation plan, "Vision-2016." This vision to take total revenue collection to Rs 4.3 trillion and tax-GDP ratio to (14.5-15 percent) by 2016-2017 with the assurance to give full support to the tax agency on operational and financial autonomy, reform program and brining potential sectors including services.

The President and Prime Minister Shaukat Aziz visited the CBR House on Thursday. The Advisor to the Prime Minister on Finance Dr Salman Shah; Minister of State on Finance Omer Ayub; Governor State Bank Dr Shamshad Akhtar, Deputy Chairman Planning Commission Dr Akram Shaikh and senior officials of the Ministry of Finance also accompanied them.

A top government official told Business Recorder that the Secretary General Revenue Division and Chairman CBR M. Abdullah Yusuf gave a detailed briefing to the President on "Vision-2016", which is a 10-year program for raising revenue collection through broadening of the tax-base and raising tax-GDP ratio. "Vision-2016", envisages 10-year revenue projections starting from 2007-2008 to 2016-2017 and strategy to meet these targets.

Under the program, the CBR will achieve 5 percent growth in Tax-GDP ratio by tapping potential sectors in the next ten years. The government is likely to set revenue collection target of around Rupees one trillion for the next financial year. To achieve this objective, the board is brining improvement in administration, plugging the loopholes in the system and creation of taxpayer's data bank to discover new taxpayers.

The President has given go-ahead signal to the CBR for implementation of the "Vision-2016" along with tax policy reforms and tax administrative reforms aimed at enhancing revenue collection.

While reviewing the overall performance of the CBR, President Musharraf assured the CBR Chairman of his full support following remarkable performance of CBR in surpassing revenue targets and 20 percent increase in number of new taxpayers every year.

Official quoted President as saying, "whatever CBR needs for autonomy and implementation of the ten-year plan would be provided to Yusuf". The President also directed the CBR to bring those sectors into the tax net, which are contributing to GDP, but their contribution in taxes is comparatively less. He also asked the tax managers to maintain high growth rates for achieving revenue targets. In this connection, the CBR should explore new avenues to bring the service's sector including retailers into the tax net.

General Musharraf also directed the CBR to reduce the burden of indirect taxes on the poor segments of the society, reduce number of taxes, broaden the tax-base and raise Tax-GDP ratio for brining potential sectors into the tax net. For poor segments of the society, the CBR should pay special attention to curtailing the tax rates.

Sources said that the President was much interested in reducing the burden of taxes on low income groups particularly emphasised broadening the tax-base by encompassing more sectors of the economy for revenue generation in coming years. He directed the CBR to take effective measures for lowering tax rate on poor.

The President has asked the tax managers to continue with the policy of taxpayer facilitation, which would also help in broadening the tax-base. The CBR should provide conducive environment to the taxpayers, sources quoted President as saying to the CBR.

The fast track economic uplift of the country would require maximum revenues and CBR would have to speed up its efforts to achieve new targets, the President said. He said the mega development projects have been possible due to substantial increase in revenue collection for which CBR has played a commendable role.

CBR Chairman and the President also discussed taxation on retail and transporter sectors for brining these undocumented sectors into the tax net. For this purpose, CBR Chairman has given a sector-wise analysis to the President highlighting tax-GAP in different potential sectors. Tax authorities also informed the President about the measures taken to bring transparency in the organisation eradicating corruption. CBR Chairman talked out the compensation package offered to the employees along with the welfare activities for them.

He also commented on the history of revenue collection, current trends, creation of Large Taxpayer Unit (LTUs), Medium Taxpayer Units (MTUs), Model Customs Collectorate and Regional Tax Offices (RTOs). The increase in revenue collection, universal self- assessment scheme and drastic reduction in litigation.

Tax authorities also highlighted the Human Resource Management (HRM) policies with the mandate to restructure the board and its field formations on modern lines.

Chairman CBR said that the revenue collection target of Rs 835 billion for fiscal 2006-2007 would be hopefully achieved. During the seven months Rs 465 billion have already been collected which shows an increase of 25 percent as against the corresponding period of last fiscal. The Board had achieved 21 percent increase by collecting Rs 713 billion, surpassing the set target of Rs 690 billion.

When contacted other sources in CBR said that the CBR will offer Golden handshake to the employee on completion of automation and establishment of reformed units.


Copyright Business Recorder, 2007

wow , a whopping 4.3 Trillion! not bad! thats around 77 billion dollars? . That should help with development! And if we can have export oriented growth then inshallah we will have fast track development! I just hope this process can continue.

CBR is doing a excellent job! . I wish that other institutions worked in the same way. Inshallah they will! .

Thats around 72 billion $!

even if we spend just 10% of that on defense (in the past we have spend ipwards of 25%) then that gives us over $7 billion a year.

I think we dont need that much for defense, most of our need in army or met by local production, we are also exporting arms, we need to upgrade our airforce and navy and are getting hands on local production.

If we have 7 billions coupled with local production, we would have the strongest defense backed by nukes delivery mechanism compared to India where each and every "R&D" project turns in to a failure because to lack of of expertise and kick backs in defense deals.

Good luck, and economic growth will also be key to Pakistan future, hopefully at least by 7+ percenty annually.

With 72 billion $ tax collection we will be looking at over 100 billion dollars budget which mean we will be spending 15-20 billion$ on defense by 2016-17.

we wont need to spend that much. even if we were spending $10 billion by that time it would be more than enough to secure our borders and make countries like indian think ten times before getting into a war with Pakistan.

the rest should be spent on education, health, poverty reduction and infrastructure.

actually by that time, procurement programs would be in progress; naval, air force, army, etc
also the maintaince of new stuff, and modern training

current;y it's around 240 Billion Rupees on Defense, for a 835 Billion rupees in taxes (29% of total taxes, plus procurements)
for 4.3 Trillion rupees, the defense expenditure at the same rate would be 1.24 Trillion Rupees; $20.6 Billion
----------------------
the defense are getting modernized, navy $10 Billion, $20 Billion for Air Force, $10 Billion for the army
over the next 15 years

so $40 Billion over 10-15 years would be $2.7-4 Billion each year, plus $4 Billion in maintance, plus an increase based on incrwased standard of living, an other upgrades in capbility, etc. $4 Billion

that would be $11-12 Billion a year

it all depends on economic growth

we need to spend more on new technologies research like nano tech.futur of country depend upon high tech. products exports

To do this we need money and our ppl hold soo much wealth that if they end up paying proper taxes we probably wont even be looking at financing our needs through Loans. At this stage according to CBR our tax potiential are abt 4times more than the tax we collect. so we current collect between 835-900 Billion rupees but our potiential is abt 3.2 trillion. Over the next decade its gonna increase to well quite alot more i would probably put it more than 5 trillion rupees.

Y am i quoting such figures, well since the reports is suggestion 4.3 trillion but to me it would be greater than 5 trillion. We have seen rapid increase in middle class and as the wealth starts to move down to the poors we will further see an increase in our middle class and members of prvious middle class moving to upper class. With this greater reduction in poverty and increase in uper class and middle class would mean our tax paying citizen has at least increased by 15%, that is personal and if we are to completly remove poverty our personal tax capabilities would increase by 25% which mean we will have 24 to 40 million more ppl paying tax. This is just personal tax.

Furthermore the increase in our industries would mean more income is coming into which can be taxed at corporation level since employees pay tax on their income which is personal tax as mentioned abve and also corportion paytax on their income which is corporate tax. Now this increase in greater investment and GDP expansion we will see greater tax paying companies. Now i think 5 trillion might even be moderate figure consider how our economy is behaving at the moment and if we are to go by the governments figure of reduction in poverty.


In other tax related threads i have posted many ways in which we can improve our tax collection in quite short period of time. I did miss the individual tax and how to tackle tax fraud by our corporation. I would personally like CBR to be sparate from TAX collection. We shud Create a new TAX OFFICE whose sole purpose is to collect all sorts of taxes while CBR collect all other non tax related revenues. Once we are able to create separate tax department we shud try to bring in smart brain from oversease i mean pakistanis who are working abroad. This way we will be setting trents for accountants to head home and work in tax field using the experience they obtained from abroad also this will give us some smart and hard working brains whose capabilities are required now in pakistan.

Next step would be to make it complusry for individuals to have TAX FILE NUMBER and any company hiring individual without tax file number shud be face legal force. With tax file number we can keep record of ppls and their income and since the companies are required to have this tax file number they too shud collect the tax from individuals based on their income level and forward that tax to TAX OFFICE and at the end of financial year the company give its employses their tax dockets. Now the individuals would have to go to the accountant to get their tax return and if the employer paid more than required individuals get refund due to other reasons. This way we can reduce the amount of tax going to waste as we would be able to balance the tax from employer with the tax return from individuals if the two doesnt match than TAX OFFICE would know where the fraud is happening and we can tackle that ASAP. THough this is similary to western tax system to me its quite effect and if need being we can improve it even further.

tx ratio in UK is 40% of the GDP

You are so good at this. With budget 4 times current figure you defense expenditure will be 4 times current expenditure 4*4Billion = $16 billion.

The same thing for India their defence will be 4*21 = $84 billion.

you are also very good at this, so what will China's defense budget be then?

So India will be spending over 4% of their gdp in 2016?