The World Bank has recommended that Pakistan establish a single agency for General Sales Tax (GST) collection to streamline fiscal policies and enhance revenue.
This proposal, part of the bank’s latest policy advice, aims to consolidate various federal and provincial revenue agencies into one, aligning federal and provincial expenditures with constitutional mandates.
In addition to GST harmonization, the World Bank has emphasized the importance of effective taxation on agriculture, capital gains, and real estate to mobilize revenues from underutilized sources.
The advice comes as part of preparations for the next fiscal year’s budget and is expected to be discussed by Finance Minister Muhammad Aurangzeb with the International Monetary Fund (IMF) during the upcoming World Bank-IMF spring meetings in Washington.
The bank has also suggested implementing new Fiscal Responsibility and Debt Limitation Acts at both federal and provincial levels.
This includes developing a national medium-term fiscal framework through the Fiscal Year 2025 budget process, aiming for tangible progress on GST harmonization across the federation.
The recommendations extend to the taxation of urban immovable property, agricultural income, and capital gains, with the World Bank calling for updates to harmonized valuation tables for property tax and the unification of tax treatments across various sectors.
The goal is to improve the tax-to-GDP ratio, which has remained a challenge since the 7th National Finance Commission award of 2010.
Further, the World Bank has advised the government to close existing corporate and sales tax exemptions and compensate affected households through enhanced social protection.
This is part of broader revenue reforms intended to expand the tax base, improve progressivity, and simplify compliance.
The Planning Commission is preparing a national planning framework for the National Economic Council to ensure resource deployment through federal and provincial synergy, reflecting the 7th National Finance Commission Award and the 18th constitutional amendment.
This framework aims to promote balanced development and regional equity as shared responsibilities of both federal and provincial governments.
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