Webinar on enabling provincial sales tax regime

Islamabad:Punjab Revenue Authority (PRA) Zain Sahi, Chairperson has said that due to high rates of taxes, critical fiscal incentives were introduced including reduction in rates in Punjab.

Mr Sahi was speaking at a webinar on ‘Towards a more innovative, effective and enabling provincial sales tax regime’ jointly organised by Sustainable Development Policy Institute and Sub National Governance here on Saturday.

Mr Sahi said that data from external sources was needed to identify taxpayers outside tax net but data analysis capabilities in the public sector also needed improvements. Therefore, PRA, he said, was willing to share its data with others government entities on reciprocal basis.

Usman Khan from Innovation Lead, SNG Programme told the participants that the Sub-National Governance (SNG) Programme worked closely with PRA to deploy an intelligent system. It aims at making integration of all government data on tax-payers easier and other data commercial available in the public domain, and thus, to use cross-referencing to identify new taxpayers. It would also make the audit process of existing tax-payers smarter and more efficient. He said adding that the system will use smart data techniques to identify the audit scope rather than a random selection.

Dr Vaqar Ahmed, Joint Executive Director, SDPI, said that to sustain investments in human development and enabling infrastructure, revenues of provinces must grow by almost 20 per cent per annum in the medium term – a point also stressed in Punjab Growth Strategy. He said that this target can be achieved through having and using better data and evidence on tax avoidance and evasion, a structured sector-specific dialogue with private sector.

This dialogue is important to help reduce the trust deficit between taxpayers and tax authorities as well as improving overall capacities for evidence-use in tax bodies, he adding that the provinces are facing uncertainties related to Federal transfers and reduction in development programme in turn threatening the sustainability of the medium-term fiscal framework. If pandemic outlook prolongs, greater efforts towards provincial revenue mobilisation would be required to sustain relief and recovery.

Public Sector Specialist, World Bank, Irum Toqeer, was of view that the expansion of tax base and improved compliance will be challenging if tax authorities do not address limited use of existing taxpayers’ data, ICT constraints and incomplete data automation within and across authorities.

Naveed Aziz, Governance Adviser, Foreign, Commonwealth and Development Office (FCDO), informed the participants that his office was working with both the Federal and provincial governments, but any work done by donors has to be institutionalised for any change to materialise.

Claire Hutchings, Senior Portfolio Leader, Oxford Policy Management (OPM), on the occasion opined that incentives and motivations of all actors in the system need to be understood by revenue authorities to devise strategies for tax compliance through behavioural nudge techniques. Earlier, Gulalai Khan, Communications and Social Impact Adviser, SNG Programme, highlighted the importance of discourse on tax revenue mobilisation by provinces.