The World Bank has advised Pakistan to tax its Agricultural and Real Estate sectors. It suggests that Pakistan can generate a revenue of almost Rs 3 trillion by taxing these sectors. This reform aims to tax the rich and wealthy individuals of Pakistan while relieving the poor people who suffer from the excruciating taxes from the government. The Bank also suggests a “comprehensive tax package” that is going to reduce the shortfalls of the budget.
These new reforms can be a game-changer for people in Real Estate and Agriculture. Reports from the World Bank suggest that if Pakistan imposes the Agricultural and Real Estate taxes properly, it can save up to 3% of the current GPD. This is estimated to be almost Rs 3.1 trillion.
The Bank is also expected to give the go-ahead and approve the $350 million loan to Pakistan related to RISE-II. However, there haven’t been any reports on the date of the meeting yet.
Tobias Haque, Lead Economist of World Bank
The World Bank’s lead economist, Tobias Haque said that Pakistan is in a very difficult situation. Tobias has said that Pakistan needs to take a variety of measures to reduce its expenditures while generating more revenue. Moreover, the World Bank has suggested to merge the salaried and non-salaried thresholds. This is being done for a better and improved Personal Income Tax (PIT).
As of today, the exempted limit stands at Rs400,000 for non-salaried individuals while the exempted limit for salaried individuals stands at Rs 600,000 per annum. The World Bank has not spoken about reducing these thresholds yet.
Analysis Report From 2019
The analysis report from the 2019 Public Expenditure Review portrayed that the reformed income tax could actually lower the exemption threshold for salaried individuals. However, the report itself needs an update to bring into account the recent inflation and changes in the labor market. This is required to ensure that low-salaried individuals don’t suffer under new reforms. The lead Economist, Tobias Haque has also shown his care and affection for the poor by saying that the burden should fall on higher income brackets so that the downtrodden may not suffer.
The World Bank often reforms the Tax Policies for Pakistan. They expect Pakistan to generate a certain amount from their taxes to ensure Pakistan can pay back the debt and be eligible for new loans. This new reform tends to tax the Agricultural and Real Estate sector further. Check to see how Pakistan’s currency improved over the month. Pakistan Rupee Excels Compared to Asian Currencies Against US Dollar