The experts in taxation and economy have highlighted that tax-collection by provinces is critical to ensure sustainable investments in human development. The speakers from diverse backgrounds shared this viewpoint ‘Towards a more innovative, effective and enabling provincial sales tax regime’, jointly organized by the Sustainable Development Policy Institute (SDPI) and Sub National Governance (SNG) here on Saturday.
Chairman, Punjab Revenue Authority (PRA), Mr Zain Sahi, said that the primary reason for non-compliance in Punjab has been high rates of taxes. Therefore, in addition to nudge techniques, fiscal incentives were also introduced including reduction in rates. He highlighted that data from external sources is needed to identify taxpayers outside tax nets, but data analysis capabilities in the public sector also need improvements. Therefore, PRA is willing to share its data with others government entities on reciprocal basis.
Mr Usman Khan, Innovation Lead, SNG Program, informed the participants that the Sub-National Governance (SNG) Programme worked closely with PRA to deploy an intelligent system. It aims to make 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. The system will use smart data techniques to identify the audit scope rather than a random selection, he added.
Dr Vaqar Ahmed, Joint Executive Director, SDPI, was of view that to sustain investments in human development and enabling infrastructure, own revenues of provinces must grow by almost 20 percent 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, Dr Ahmed said. He added further that the provinces are facing uncertainties related to federal transfers and reduction in development program in turn threatening the sustainability of the medium-term fiscal framework. If pandemic outlook prolongs, greater efforts towards provincial revenue mobilization would be required to sustain relief and recovery.
Public Sector Specialist, World Bank, Ms 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. Mr Naveed Aziz, Governance Adviser, Foreign, Commonwealth and Development Office (FCDO), informed the participants that FCDO has been working with both the federal and provincial govts, but any work done by donors has to be institutionalized for any change to materialize.
Ms 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.
Ms Gulalai Khan, Communications and Social Impact Adviser, SNG Program, earlier shared various dynamics of the topic and highlighted the importance of discourse on tax revenue mobilization by provinces.
