Policy note on reforming sales tax launched

PESHAWAR: The Consortium for Development Policy Research (CDPR) in collaboration with the International Growth Centre (IGC), Sustainable Energy and Economic Development (SEED) and the provincial government launched a policy note on ‘Reforming Sales Tax on Services in Khyber Pakht-unkhwa’ through a webinar.

The note presents a framework for reforming Sales Tax on Services (STS) in the province through the Khyber Pakhtunkhwa Revenue Authority (KPRA).

This policy note was driven by SEED’s strategic priority to provide technical assistance to the KP government funded by Foreign, Commonwealth and Development Office (FCDO). One of the main agendas of SEED, a multi-sectorial seven-year programme, is to support the KP government in achieving economic development and undertake sustainable energy reforms in KP.

It provides a structure of key reforms for STS in KP and has been drafted in consultation with SEED’s partners, CDPR and IGC Pakistan. The note has been authored by Faisal Rashid, Senior Consultant on Public Financial Management at Oxford Policy Management, and peer reviewed by Dr Anjum Nasim, Senior Research Fellow at the Institute of Development and Economic Alternatives.

Provincial Finance Minister Taimur Jhagra was the chief guest at the launching ceremony. Other panelists included Hassan Khawar, Team Leader, SEED, Faisal Rashid and Hassan Daud Butt (CEO, Board of Investment and Trade, KP).

The session was moderated by Dr Ijaz Nabi.

Hassan Khawar explained that for the last few years there has been a growing realization that provinces needed to generate own-source revenue and how this policy notes paves the way forward to realize this.

Faisal Rashid said the KPRA made significant progress by increasing the scope of taxes from 13 services to 46 categories of services. SST collection increased from Rs6 billion to Rs17 billion. He suggested that bringing in IT reforms for improved compliance such as Data Integration and Data Scraping, RIMS, E-IMS, E-courts, E-Strive and SMS portals to help broaden bases, improve real time connectivity with businesses and performance management of staff.

Hassan Daud said that KPRA was now working on building its capacity by bringing novelty in the overall framework through new technologies and ideas.

Dr Ijaz Nabi suggested that it was important to use this opportunity to identify additional services that needed to be taxed, and find better ways of generating more revenue through property taxes. This could be done by enhancing the legal environment of tax enforcement through relevant training schemes, he added.

Taimur Jhagra concluded the discussion by explaining how KPRA reform has been a top priority for the government and highlighted some successes of recent reforms such as increasing revenue by 65 percent from last year.