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TAX REFORMS

Taxation Reforms Crucial for Pakistan

Government-Led Taxation Reforms Crucial for Pakistan, Reliance on Multilateral Donors Limited for FBR Overhaul

“Dr. Shamshad Akhtar, Pakistan’s caretaker finance minister, has expressed frustration with the Federal Board of Revenue (FBR), threatening to escalate issues to higher authorities if resistance to her proposed restructuring plan persists. Despite criticism, Dr. Akhtar is determined to reform the FBR, aiming to raise the tax-to-GDP ratio from 8.5% to 20% within two years through digitization, ending exemptions, and enhancing governance. Her plans, which were approved by the Special Investment Facilitation Council on January 3, 2024, have faced open defiance from FBR officials. In a recent seminar at the National University of Science and Technology, Dr. Akhtar made a public disclosure about the FBR’s restructuring, emphasizing her commitment to the reforms despite facing opposition.Pakistan’s caretaker finance minister, is under scrutiny for her ambitious plans to restructure the Federal Board of Revenue (FBR). Historical precedents, such as the failed tax reforms linked to the IMF’s Poverty Reduction and Growth Facility program and the Tax Administration Reform Project funded by the World Bank and other donors, cast doubt on the feasibility of her aggressive timeline. Critics point to the past failures of tax reforms in Pakistan, emphasizing the need for a more democratic and publically debated approach. The current restructuring efforts, approved by the Special Investment Facilitation Council, are seen as lacking public consensus and continuity in key decision-making. Experts argue for a more equitable and comprehensive tax policy, free from foreign donor influence, and caution against hasty changes without proper democratic processes. The situation highlights the ongoing challenges in overhauling Pakistan’s tax system, with concerns about inequity and inefficiency at the forefront.”