Public Sector Revenue

8/9/2019 Public Sector Revenue

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Nothing GreatNothing Great

was achieved inwas achieved inthis world withoutthis world without

hard workhard work


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LAYOUTLAYOUTIntroduction.Introduction. Public Sector.Public Sector.

Why Increase Public Revenue?Why Increase Public Revenue? Types of Taxes.Types of Taxes.

Statutory Tax Structure.Statutory Tax Structure.

Types of Public Revenue.Types of Public Revenue.

General Concepts of Taxation.General Concepts of Taxation.

By: Zeeshan AhmedBy: Zeeshan Ahmed


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LAYOUTLAYOUT(Contd.)(Contd.)

Basis for Taxation of Income.Basis for Taxation of Income.

By: Israr Ahmed.By: Israr Ahmed. Problems with Tax Collections.Problems with Tax Collections.

Evaluation of Current Tax Policy.Evaluation of Current Tax Policy.

Suggestions To improve TaxSuggestions To improve TaxStructure.Structure.

Conclusion.Conclusion.

By: Asad Ali.By: Asad Ali.


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PUBLIC SECTORPUBLIC SECTOR


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Why to Increase

Why to IncreasePublic Revenue?Public Revenue?


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Types of TaxesTypes of Taxes Direct Taxes.Direct Taxes. Indirect Taxes.Indirect Taxes.


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Statutory Tax StructureStatutory Tax Structure Proportional or FlatProportional or Flat--RateRate

Tax.Tax. Progressive or GraduatedProgressive or Graduated--

Rate Tax.Rate Tax.Regressive Tax Rate.Regressive Tax Rate.


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Statutory Tax StructureStatutory Tax Structure

ATR

MTR

MTR

ATRATR

MTR

Flat-Rate RegressiveProgressive


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Types of PublicTypes of Public

RevenueRevenue1. Tax Revenue.1. Tax Revenue.

Income Tax.Income Tax. Corporate Income Tax.Corporate Income Tax.

Property Tax.Property Tax.

Payroll Tax.Payroll Tax.

2. Non2. Non--Tax Revenue.Tax Revenue.


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Taxable IncomeTaxable Income Salary,Salary,

Income from Property,Income from Property, Business,Business,

Capital Gains,Capital Gains, Income from other Sources.Income from other Sources.


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Countries WithoutCountries Without

Income TaxIncome Tax AndorraAndorra

BahamasBahamas BermudaBermuda

BahrainBahrain

BruneiBrunei Cayman IslandsCayman Islands

KuwaitKuwait

MonacoMonaco

OmanOman

QatarQatar Saudi ArabiaSaudi Arabia

SomaliaSomalia

UAEUAE UruguayUruguay

VanuatuVanuatu


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General Concepts of TaxationGeneral Concepts of Taxation

Resident Individual.Resident Individual.

He is present in Pakistan for 182 daysHe is present in Pakistan for 182 days

or more in a tax year; oror more in a tax year; or HeHe isis anan employeeemployee oror officialofficial ofof thethe

FederalFederal oror ProvincialProvincial GovernmentGovernment

postedposted abroadabroad inin aa taxtax yearyear.. TaxTax YearYear isis aa periodperiod ofof twelvetwelve

monthsmonths endingending onon 3030thth dayday ofof JuneJune..


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ConceptsConcepts(Contd.)(Contd.)

Double Deductions and DoubleDouble Deductions and DoubleDerivations.Derivations.

Agricultural Income.Agricultural Income. Standard Rate of Tax Deduction.Standard Rate of Tax Deduction.

Reduced Rate of Tax Deduction.Reduced Rate of Tax Deduction.

Public Company..5% of grossPublic Company..5% of grossamount of Dividend.amount of Dividend.

Insurance Company...5% of grossInsurance Company...5% of grossamount of Dividend.amount of Dividend.


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Reduced RatesReduced Rates (Contd.)(Contd.)

Mining Operations other thanMining Operations other thanPetroleum 7.5% of grossPetroleum 7.5% of gross

amount of Dividend.amount of Dividend.

Purchaser of Power Project PrivatizedPurchaser of Power Project Privatizedby WAPDA .7.5% of grossby WAPDA .7.5% of gross

amount of Dividend.amount of Dividend. A Company Set for PowerA Company Set for Power

Generation.. ..7.5% of grossGeneration.. ..7.5% of gross

amount of Dividend.amount of Dividend.


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Tax ExemptionsTax Exemptions

A Provincial Government.A Provincial Government. A local authority.A local authority.

A recognized provident fund.A recognized provident fund.

A group insurance scheme approved byA group insurance scheme approved bythe Central Board of Revenue.the Central Board of Revenue.

Liaqat National Hospital Association,Liaqat National Hospital Association,Karachi.Karachi.

Abdul Sattar Edhi Foundation andAbdul Sattar Edhi Foundation andBilquis Edhi Foundation.Bilquis Edhi Foundation.

AlAl-- shifa Trust, Rawalpindi.shifa Trust, Rawalpindi.

Fatimid Foundation, Karachi etc.Fatimid Foundation, Karachi etc.


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ConceptsConcepts (Contd.)(Contd.)

Government fiscal decisions cause importantGovernment fiscal decisions cause importanteconomic effects.economic effects.

Public sector financial decisions cause effects inPublic sector financial decisions cause effects inany functional area of the economic activity.any functional area of the economic activity.

NonNon--neutrality effect may be beneficial in termsneutrality effect may be beneficial in termsof a particular economic goal.of a particular economic goal.

Taxes are paid by private as well as by the publicTaxes are paid by private as well as by the publicsector.sector.

In countries like all the Arab countries, whereIn countries like all the Arab countries, whereGovernment gets revenues through the export ofGovernment gets revenues through the export ofoil, they may not need to collect taxes from theoil, they may not need to collect taxes from thepeople. But inpeople. But in developing or underdevelopeddeveloping or underdevelopedcountries, Government has to collect taxes tocountries, Government has to collect taxes to

finance different projects.finance different projects...


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Effect of NonEffect of Non

Neutrality inNeutrality inTaxation.Taxation.


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Coming up NextComing up Next

Mr. Israr AhmedMr. Israr Ahmed


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Basis of taxation of incomeBasis of taxation of income


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Income from propertyIncome from property

Income from businessIncome from businessCapital gainsCapital gains

Income from other sourcesIncome from other sources


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Exemption and taxExemption and taxconcessionconcession


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Tax of individualsTax of individuals


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Taxation of association ofTaxation of association of

personspersons


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Taxation of companiesTaxation of companies

Insurance companiesInsurance companies

Petroleum companiesPetroleum companiesExploration of mineralsExploration of minerals


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Rules on geographicalRules on geographicalsource of incomesource of income


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Taxation of foreign sourceTaxation of foreign source

of incomeof income


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AntiAnti--avoidance Provisionsavoidance Provisions


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Coming up NextComing up Next

Mr. Asad Ali.Mr. Asad Ali.


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Problem With Tax CollectionProblem With Tax Collectionin Pakistanin Pakistan

Structure of Economy.Structure of Economy.

Low Literacy Rate and Human Capital.Low Literacy Rate and Human Capital.NonNon--Availability of Reliable Statistics.Availability of Reliable Statistics.

Uneven Income Distribution.Uneven Income Distribution.

Undocumented Economy.Undocumented Economy.Tax Evasion.Tax Evasion.

Tax Avoidance.Tax Avoidance.

D

elinquency.D

elinquency.


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Government Reforms toGovernment Reforms to

Strengthen Tax SystemStrengthen Tax SystemWide Ranging Tax and Tariff Reforms.Wide Ranging Tax and Tariff Reforms.

Work on Fiscal Transparency.Work on Fiscal Transparency.

Reducing Tax Rates.Reducing Tax Rates.Broadening the Tax Base.Broadening the Tax Base.

Shifting the incidence of Tax fromShifting the incidence of Tax from

Imports and Investment toImports and Investment toConsumption and Incomes.Consumption and Incomes.

T.A.R.PT.A.R.P


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Administration Reform StrategyAdministration Reform Strategy

Policy Reforms.Policy Reforms.Administrative Reforms.Administrative Reforms.

Organizational Reforms.Organizational Reforms.


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Policy ReformsPolicy Reforms

Simplification of Laws.Simplification of Laws.

Introduction of Universal SelfIntroduction of Universal Self

Assessment.Assessment.Elimination of Exemptions.Elimination of Exemptions.

ReducingDependence on WithholdingReducingDependence on Withholding

Taxes.Taxes.EffectiveDispute ResolutionEffectiveDispute Resolution

Mechanism.Mechanism.


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Administrative ReformsAdministrative Reforms

Transforming Income Tax OrganizationTransforming Income Tax Organizationon Functional Lines.on Functional Lines.

ReRe--engineering of Manual Process of allengineering of Manual Process of allTaxes.Taxes.

Increasing Effectiveness of CBR.Increasing Effectiveness of CBR.

Improving Skills and Integrity of WorkImproving Skills and Integrity of WorkForce.Force.


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Organizational ReformsOrganizational Reforms

ReRe--Organizing of CBR headquarters.Organizing of CBR headquarters.Reduction in Work Force from ExistingReduction in Work Force from Existing

Level.Level.

CCFR.CCFR.


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Tax Administration ReformTax Administration Reform

Project (T.

A.

R.

P)Project (T.

A.

R.

P)

Developing Human ManagementDeveloping Human Management

Strategy.Strategy. Promote Tax Compliance Culture.Promote Tax Compliance Culture.

Develop a Communication Program.Develop a Communication Program.

Computerization and AppropriateComputerization and AppropriateRegistration.Registration.


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Evaluation of Current TaxEvaluation of Current Tax

PolicyPolicy Payment of Dividends by TaxPayment of Dividends by Tax

Administration.Administration.

Tax Collections By CBR are Picked up.Tax Collections By CBR are Picked up.

Revenue Surplus.Revenue Surplus.

Primary Balance was in Surplus.Primary Balance was in Surplus.

Share of Indirect Taxes has DeclinedShare of Indirect Taxes has Declined

Share of Direct Taxes has IncreasedShare of Direct Taxes has Increased


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Evaluation (Contd.)Evaluation (Contd.)

Fiscal deficit reduced from 7.0% of GDPFiscal deficit reduced from 7.0% of GDP -- 3.3% of GDP3.3% of GDP

Revenue deficit narrowed from 2.4 % of GDPRevenue deficit narrowed from 2.4 % of GDP 0.4 % of GDP0.4 % of GDP

0%

1%

%

3%

4%

5%

6%

7%

Fiscal Reven

1990

005/06


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Suggestions to Improve TaxSuggestions to Improve Tax

StructureStructureTax structure should facilitate use ofTax structure should facilitate use of

fiscal policy for stabilization andfiscal policy for stabilization and

growth objectives.growth objectives.Taxes should be chosen so as toTaxes should be chosen so as to

minimize interference with theminimize interference with theEconomic decision is otherwise efficientEconomic decision is otherwise efficientmarkets.markets.

Revenue yield should be adequate.Revenue yield should be adequate.


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Suggestions (Contd.)Suggestions (Contd.)

Distribution of tax should be equitable.Distribution of tax should be equitable.

Tax structure should permit fair and nonTax structure should permit fair and non--arbitrary administration and should bearbitrary administration and should beunderstandable to the taxpayer.understandable to the taxpayer.

Administration and compliance costs must beAdministration and compliance costs must beminimized. They should be kept as areminimized. They should be kept as are

compatible with other objectivescompatible with other objectives Government must make sincere effortsGovernment must make sincere efforts

towardsDocumentation of the wholetowardsDocumentation of the wholeEconomy.Economy.


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ConclusionConclusion


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ReferencesReferences

paktax.compaktax.com

finance.gov.pkfinance.gov.pk

cbr.gov.pkcbr.gov.pk

Deardoffs glossary toDeardoffs glossary toInternational Economics.International Economics.


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Any QuestionsAny Questions


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Thanks for Your PresenceThanks for Your Presence

Good luck for your presentationGood luck for your presentation

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Public Sector Revenue

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