Pakistan's government is facing a bleak financial year with tax revenue expected to fall to Rs430 billion (£5 billion) from its original aim of Rs457 billion. Usually, the Central Board of Revenue (CBR) collects around 12 per cent of GDP in yearly taxes but analysts claim that this figure needs to be about 20 per cent to prevent the country's current economic situation from getting worse.
However, Mieko Nishimizu, the World Bank vice-president for south Asia, says that the CBR's tax collection system is currently undergoing reforms which will significantly improve its efficiency. Government officials also believe the reform programme will considerably reduce tax evasion within two to three years.
'There are some good changes going on in the CBR,' said Ms Nishimizu in an FT interview. 'What has always stopped Pakistan is not poverty. It's the sad state of the CBR. A country that collects only 10-12 per cent of its GDP in tax cannot have enough resources to invest in its infrastructure to be able to grow fast.'
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