Proposal to increase tax revenue

POLICY Research Institute, a private think tank, has proposed that the National Board of Revenue (NBR) bring all forms of personal incomes under the tax regime. Given that every year the government is taking more and more ambitious goals under its belt, experts believe that the only way to generate sufficient revenue is to maximise tax collection from personal incomes. When one takes into account the fact that the top 10 per cent of the population own 35 per cent of the national income but personal income taxes constitute a meagre 1.5 per cent of gross domestic product (GDP), there are areas where the NBR could improve its performance.
Indeed, there is no reason why the NBR cannot undertake the task of meeting challenging revenue targets. As the government has set its target on raising this ratio to 4 per cent in the next 5 years, some fundamental changes in revenue collection must take place. To facilitate the broadening of the tax base, enforcement of tax laws and a simplification of tax filing and tax payments systems are prime requisites. For NBR to perform to desired levels, structural reforms need to be pushed through as soon as possible. Decentralisation is one of the steps that both domestic and international experts agree upon, as the way forward to a better functioning NBR. Unless the tax system is modernised, government's plans to increase revenue may be in for a rude awakening.