Pakistan has lowest tax to GDP ratio in world

LAHORE – Chairman Federal Board of Revenue, Ali Arshad Hakeem said that Pakistan has one of the lowest tax to GDP ratios in the world as only 0.9 per cent of the population of the country pays income tax. Talking to news agency on Sunday about the trend of people towards taxation, FBR
Chief said that country ranks 23rd from the bottom of a list of 176 countries while 80 per cent of population of Canada pays tax and even 4.7 per cent of Indians also contributing towards tax. He said during the year 2010-11, only 3.1 million NTNs were issued which constitutes only 0.92 per cent of population.
He said that 82 per cent of all sales tax and federal excise duty is paid by the top 100 companies. He said that under existing tax law, any person earning less than Rs 400,000 annually or Rs 33,333 per month is not subject to pay any income tax at all. He said that only 269,770 individuals filed for taxes and paid a positive amount consistently from2009-2011 while 3.1 per cent of the government’s total tax revenue is collected from the income tax on salaried individuals.
Ali Arshad Hakeem said that about 7.7 per cent of the country workforce-approximately 4.5 million-earned enough money to pay the income tax during fiscal year 2011 when the minimum taxable income was Rs 300,000 per year. He said 92.2 per cent of the country’s labour force does not make enough money to pay income tax under existing income tax regime.
FBR Chief said that out of 1,021,669 tax return filers in 2011, 394,169 paid an income tax less than Rs 10,000.He said country’s tax yield from individuals income tax is inadequately low compared to other countries and has been on the decline since early 2000.
He said that revenues from the individual income tax have declined from 1.5 per cent of GDP in 2000-2001 to less than one per cent of GDP in 2010-11.He said that now the ratio of per centage of population files for taxes is 0.5 only. He said that only 6,152 people filed personal income tax higher than Rs 5 million in 2011.
Ali Arshad Hakeem said that if the figure for imports is excluded, since most of them are headed for other parts of the country,37.8 per cent of all taxes are collected from Karachi while 37.5 per cent of all taxes are collected at the two sea port in the country. He said that Rs 650 billion is the cost of the new legal exemptions from taxation granted in just last four years.
When contacted for comments, chief spokesman of Federation of Pakistan Chambers of Commerce and Industry and veteran trade leader Iftikhar Ali Malik who is also former federation and LCCI Chief said that the country is in deep economic crisis and asked all traders, importers, exporters and industrialists to clear their all payable taxes on top priority and play their role in nation building.
He stressed the urgent need for expanding the tax net across the country and urged the leading traders to get them registered with FBR and pay taxes on time. He said that economic revolution in the country is only possible through the active participation of business community. Iftikhar Ali Malik said that FBR Chief Ali Arshad Hakeem has fully assured that all the genuine problems of the business community especially tax payers will be solved on top priority as he always attached great importance to them.
He said that FBR must detect the tax evasion and FPCCI and other chambers will cooperate with FBR in this regard and on the other hand corrupt tax collectors should also be never spared at any cost.

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