Tareen for enhancing tax ratio for economic growth

KARACHI: Advisor to PM on Finance Shaukat Tareen on Saturday underlined the need for enhancing tax to GDP ratio to 18 to 20 percent to achieve 7 to 8 percent growth in the economy.

He was speaking at the excellence awards ceremony for top taxpayers of Large Taxpayers Unit (LTU) here Saturday. Chairman FBR, Ahmad Waqar, Governor State Bank of Pakistan Salim Raza, Fauzia Wahab MNA, Senator Ahmed Ali were also present on the occasion.

He said that other rising economies like China, Turkey and India have enhanced their tax to GDP ratio beyond 20 percent to maintain higher GDP growth.

He informed that China has maintained a tax to GDP ratio of 21 percent in the past several years while Turkey is maintaining it at 28 percent to accomplish higher economic growth.

Tareen pointed out that despite higher revenue collection rising from Rs 300 billion to Rs 1.3 trillion, the tax to GDP ratio has declined from 13.9 percent in 1996 to 9.6 percent in 2007-08.

He said the government which collect higher revenue can look after the welfare of their people much better. “On the contrary, revenue collection in Pakistan has fallen short, forcing the economic managers to resort to bank borrowing and thus fueling inflation and crowding out private sector”, he added.

Later, talking to media, he said that profiteers were responsible for price hike in the country. He said the government was trying to decrease prices in the country and it has lowered petrol prices and CPI has also come down.

FBR chairman said that merger of direct taxes with sales tax and federal excise into inland revenue services was a major initiative of the present government to enhance tax collection.

DG LTU Faiyaz Khan in his welcome address highlighted the performance of LTU in tax collection.

Later, the Advisor gave away excellence award among major tax payers including PPL, PSO, Lakson Tobacco, NBP, Unilever Pak, NIC, CAA, Pak Suzuki, Pakistan Steel, Pakistan Beverage Ltd, etc.