WB Suggests Pakistan to Increase Taxation on Property, Agriculture Sectors

WB Suggests Pakistan to Increase Taxation on Property, Agriculture Sectors

Islamabad: According to a news published on 05-10-2023, the World Bank (WB) has advised Pakistan to increase the taxation on sectors like real estate and agriculture.

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In the report named Pakistan Development Update: Restoring Fiscal Responsibility, issued by the World Bank (WB), the country is suggested to reform their taxation on property and agriculture. As per the report, the increased taxes on these sectors will help boost the country’s fiscal stability. It will also improve the property tax collection for Pakistan.

As per the agricultural tax restructuring, The WB proposes adjusting the tax exemption beginning with the existing 12 1/2 Acre. The implementation is expected to comprehend more agricultural land within the tax framework. In addition, the World Bank also urges implementing the appropriate categorization of land criteria for tax rates, including size, location, and irrigation status.

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The WB report also mentions that the initiative will produce additional provincial revenues up to approximately 1% of the GDP.  Moreover, the bank also divulged that Pakistan severely needs to rectify the taxation of agricultural land used for non-agricultural purposes, which currently exploits tax arbitrage.

World Bank recommended several measures to strengthen property tax collection, including increasing property taxes that align with observers as comparable economies. It also includes harmonizing the valuation systems currently used for various land-related taxes. As per sources, the goal behind increasing taxes on property and agriculture is to establish tax rates based on capital values accurately reflecting prevailing market prices.

They also suggest the proper maintenance of accurate land ownership records linked to each individual’s Computerized National Identity Cards (CNICs) and National Tax Numbers. The policy and legal framework enhancement to encompass sizable peri-urban settlements outside existing municipal boundaries within appropriate land taxation is also a suggestion for proper tax collection.

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