World Bank extends support till December '11

ISLAMABAD (APP) - The World Bank-funded reforms Programme of Federal Board of Revenue (FBR) would continue for next two years in order to bring about changes in the overall tax environment to facilitate the taxpayers and enhance revenues.
Owing to great success of the reforms programme launched in 2002, the WB has extended its support till Dec 2011, Member Direct Taxes policy and FBR spokesman, Asrar Raouf told APP. He said that FBR has already introduced various reforms in the tax collection system to do away with the harassment attitude in tax collection and created friendly environment for taxpayers. He said that the friendly environment has encouraged taxpayers and thereby enhanced overall collections.
Asrar Raouf said that the board has already submitted the draft policy of Value Added Tax (VAT) to the Parliament for approval and expressed the hope that it would be taken up during the upcoming session of the Assembly.
He said that once VAT mode of taxation is implemented, it would add at least Rs.150b to the total revenue collections of the country.
However, he said IMF has projected additional revenue of Rs.400b every year for the country. We have submitted six drafts before the assemble, out of which four drafts are related services tax by provinces, one to tax on goods by federation and one draft is for capital territorys taxation on services and goods.
He said that VAT mode of taxation has achieved global recognition as about 150 countries have been utilizing this mode successfully for collecting taxes.
He said that under the system, taxes would be imposed on services like doctors, architects and lawyers besides bringing into the tax net the telecommunication, private educational institutions and transport sector. He admitted that the VAT mode of taxation was one of the conditions of International Monetary Fund (IMF) under Standby agreement, however added that its implementation was subjected to the approval of National Assembly.
To a question, Raouf said that it was very difficult to bring the agriculture sector into the tax net as the government has to provide subsidies to the farmers for enhancing yield, particularly the production of staple crops.
If the tax is imposed it may affect the productivity, he said adding that however, taxes could be imposed on horticulture production like orchards.
He said that FBR was exceeding the target tax collection during December but the incident of arson in Boltan Market, Karachi has negatively impacted its collections.
He said that the board collected Rs577 billion in July- December (2009-10) as against the target of Rs.595 billion. But as compared to the collections of Rs.553 billion collected last year, the tax collections till December have witnessed positive growth, he said.