Tax Gap reduction essential for economic growth-Yassar Sakhi Butt

  • January 21, 2012
No work has been done for the reduction of tax gap in the country which needs special consideration by the concerned authorities that would ultimately help to increase the tax-to-GDP ratio.

The tax gap in Pakistan should be brought down with constant efforts and reform process in the tax administration as Government has fixed its economic targets on the basis of revenue collection. Thus, there is a dire need for reducing tax gap for raising revenue collection, Yassar Sakhi Butt, President, Islamabad Chamber of Commerce and Industry (ICCI) has stated this in a statement.

He expressed concern over the World Bank report that tax gap was 69 percent in 2008, has now gone up to 79 percent which was the highest-ever figure. He emphasized on exploiting the true tax potential of the country and said that fair and equitable tax policies were essential for revamping tax collection system and pulling the economy out of mounting debt.

Proactive measures should be introduced to plug the leakages and improve the refund system in tax departments which would also bridge the gap by bringing the evaders under the tax net, he maintained.

ICCI president said that tax revenue accounts less than 10 percent of Pakistan’s GDP, which was extremely low while in India tax revenue accounts for 18 percent of the GDP. He suggested that our Government should analyze the tax models of Sri Lanka, Turkey, Brazil and Taiwan, where tax-to-GDP ratio has shown major jump and revenue collection has increased substantially.

Yassar Sakhi Butt said that there should be a free and fair taxation policy to raise revenues, therefore, Government must develop an environment of trust to build the confidence of taxpayers which would reduce the existing tax gap and generate tax revenues in the long-run.