PBC Suggests Collecting Rs. 1.5 Trillion in Taxes Without Burdening the Public

The government can collect an additional Rs. 1.5 trillion revenue from under-taxed sectors.

Pakistan Business Council (PBC) estimates tax revenue potential from under-taxed sectors exceeds Rs. 1.5 trillion. It tweeted, “Provinces can get Rs 288 B[illio]n additional from agriculture and property tax”.

“The federation, Rs 1.23 trillion from wholesale, retail, real estate and by curbing under-invoicing,” it stated.

According to PBC data, there’s the potential of collecting Rs. 195 billion from the agricultural sector. The current collection levels are substantially low as provinces have so far scooped up just Rs. 3 billion from the space. By bringing wholesale, retail, and real estate under the tax bracket, the government can collect incremental revenue of Rs. 1,230 billion.

Despite having the capacity for Rs. 116 billion in potential property taxes, only Rs. 20 billion has been collected so far. On the flip side, the federation is missing out on Rs. 1,385 billion in taxes due to under-invoicing, wholesale, retail, and real estate.

Data reveals the authorities are receiving only Rs. 150 billion from wholesale, retail, and real estate.

Tax collection from the wholesale/retail segment is currently limited to just Rs. 43 billion while there’s potential to generate roughly Rs. 277 billion. Similarly, tax collection from real estate is limited to Rs. 107 billion while there is potential to generate up to Rs. 234 billion. Meanwhile, the economy is missing out on Rs. 488 billion annually to under-invoicing.

The PBC’s estimates roughly coincide with the Federal Board of Revenue’s (FBR) recent comments on the national tax gap earlier in January when it officially admitted that a huge tax gap of Rs. 1.289 trillion exists in the tax collection system of Pakistan.

Pertinently, the tax gap is broadly defined as the difference between what taxpayers should pay and what they actually pay.

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