Islamabad, Nov 20: A report by Fredrich Ebert Stiftung (FES) suggests that applying tax rates on agricultural income similar to those imposed on other sectors could generate Rs. 65 billion annually for Pakistan. With IMF conditions urging action, provinces are moving toward implementing Agricultural Income Tax (AIT).
Punjab Assembly has passed the AIT bill, while other provinces—Sindh, Khyber Pakhtunkhwa, and Balochistan—still need legislative approval.
The report also reveals a significant Rs. 1.2 trillion tax compliance gaps in the corporate sector, particularly in industries like tobacco, real estate, automobiles, tea, and pharmaceuticals, with an estimated Rs. 310 billion in tax evasion as of 2021.
At a roundtable on Pakistan’s National Tax Policy, Senator Saleem Mandviwalla criticized the disproportionate tax burden on the salaried class compared to sectors like retail and real estate.
Former Senator Farhatullah Babar advocated for ending tax exemptions for the military and civilian elites to promote fairness.
Additionally, the report pointed out the regressive nature of South Asia’s taxation system, with corporate income tax contributing only 4.4% of GDP, while GST contributes 3.4%.
Despite a direct tax gap of Rs. 1,961 billion, only Rs. 1,655 billion of the Rs. 2,833 billion owed in corporate income tax was collected, leading to a 41% shortfall.
