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World Bank okays $304m for reforms

muhammadhafeezmalik

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World Bank okays $304m for reforms

Financing to support Punjab project as provincial tax receipts decline

1603517528358.png



The World Bank has approved a $304 million loan for reforms in Punjab’s taxation system as provincial tax revenues are declining for the past two consecutive fiscal years, which happened to be first two years of the Pakistan Tehreek-eInsaf (PTI) government.

The World Bank’s board of executive directors approved $304 million in financing for the Punjab Resource Improvement and Digital Effectiveness Programme (PRIDE), according to a statement issued by the Washington-based lender on Friday.

Total cost of the tax reform project is estimated at Rs90 billion or $554 million and the remaining $250 million equivalent financing will be arranged by the provincial government.

The programme supports efficiencies in public resource management that generate savings and create fiscal space for growth generating investments in the Punjab province, said the World Bank. However, the functions that the government of Punjab Chief Minister Usman Budzar has listed in return for $304 million or about Rs50 billion do not need any financial assistance.

The loan has been obtained for improving business process re-engineering, revision, change of rules and regulations, development of comprehensive automated systems, introduction of e-services and institutional capacity building.

All these functions do not need any foreign money, rather they require political will to enhance the narrow provincial tax base. In return for the loan, the World Bank has imposed conditions of reducing “unbudgeted fiscal risks including the unfunded pension liability of the government of Punjab, and reducing variance between original and actual budget expenditures,” according to provincial government documents.

But the World Bank noted in project documents that the expected net economic impact of the programme would be $1.5 billion over the five-year implementation period. The projected net benefit from improvements in Punjab pension fund management; adoption of e-procurement and digitisation of local service delivery; and increase in own source collection is valued at $1.26 billion, it added.

“The PRIDE programme is integral to the World Bank’s whole-of-country approach in helping Pakistan strengthen public financial management systems at the federal and provincial levels,” said World Bank Country Director for Pakistan Najy Benhassine.

World Bank documents showed that the economic downturn was projected to increase unemployment in Punjab by 5 to 8 million, pushing many households below the poverty line. In recent years, the province has made efforts to increase its own source revenues, which come mainly from provincial taxes, to ramp up investment in development priorities.

The economic fallout from the pandemic is, however, expected to reduce the province’s own revenues, leaving it with fewer resources to finance its emergency response and sustain the already modest investment in human capital and infrastructure. Punjab met only 18% of its total expenditure in fiscal year 2018-19 from its own tax collection while the remaining expenditure was financed through federal transfers and grants.

According to World Bank’s estimates, Punjab has the potential to increase its tax revenues, without imposing new taxes or raising tax rates.
Punjab’s tax receipts currently account for only 0.8% of the province’s estimated economic output, indicating that the province may be collecting only a quarter of its tax potential, according to the World Bank.

The World Bank said PRIDE would support the Punjab Growth Strategy and the Punjab Public Financial Management Reforms Strategy, both of which were aimed at developing a robust public financial management system.

But the $304 million loan had been sought from the World Bank to make taxation more progressive, broaden the tax base, reduce interaction between taxpayers and tax collectors and facilitate taxpayers to improve the ease of doing business.

Last month, the PTI’s provincial government had used PML-N’s era statistics to seek concept clearance of the loan from the federal government as its own performance was not up to the mark.

World Bank documents showed that the total provincial tax collection was constantly on the decline for the last two fiscal years. In fiscal year 2017-18, which was the last year of the PML-N government, total tax collection by the province stood at Rs205 billion, which dipped to Rs191 billion at the end of second year of the PTI government.

During the past two years, the provincial tax collection cumulatively decreased by Rs14 billion or nearly 7%. Punjab government’s documents showed that the province’s tax-to-gross domestic product (GDP) ratio had increased from 0.4% in 2009-10 to 1.2% in 2017-18.


The Punjab government followed in the footsteps of the federal government that also acquired a loan of $400 million from the World Bank in the name of tax reforms.



 

TheSnakeEatingMarkhur

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World Bank okays $304m for reforms

Financing to support Punjab project as provincial tax receipts decline

View attachment 682241


The World Bank has approved a $304 million loan for reforms in Punjab’s taxation system as provincial tax revenues are declining for the past two consecutive fiscal years, which happened to be first two years of the Pakistan Tehreek-eInsaf (PTI) government.

The World Bank’s board of executive directors approved $304 million in financing for the Punjab Resource Improvement and Digital Effectiveness Programme (PRIDE), according to a statement issued by the Washington-based lender on Friday.

Total cost of the tax reform project is estimated at Rs90 billion or $554 million and the remaining $250 million equivalent financing will be arranged by the provincial government.

The programme supports efficiencies in public resource management that generate savings and create fiscal space for growth generating investments in the Punjab province, said the World Bank. However, the functions that the government of Punjab Chief Minister Usman Budzar has listed in return for $304 million or about Rs50 billion do not need any financial assistance.

The loan has been obtained for improving business process re-engineering, revision, change of rules and regulations, development of comprehensive automated systems, introduction of e-services and institutional capacity building.

All these functions do not need any foreign money, rather they require political will to enhance the narrow provincial tax base. In return for the loan, the World Bank has imposed conditions of reducing “unbudgeted fiscal risks including the unfunded pension liability of the government of Punjab, and reducing variance between original and actual budget expenditures,” according to provincial government documents.

But the World Bank noted in project documents that the expected net economic impact of the programme would be $1.5 billion over the five-year implementation period. The projected net benefit from improvements in Punjab pension fund management; adoption of e-procurement and digitisation of local service delivery; and increase in own source collection is valued at $1.26 billion, it added.

“The PRIDE programme is integral to the World Bank’s whole-of-country approach in helping Pakistan strengthen public financial management systems at the federal and provincial levels,” said World Bank Country Director for Pakistan Najy Benhassine.

World Bank documents showed that the economic downturn was projected to increase unemployment in Punjab by 5 to 8 million, pushing many households below the poverty line. In recent years, the province has made efforts to increase its own source revenues, which come mainly from provincial taxes, to ramp up investment in development priorities.

The economic fallout from the pandemic is, however, expected to reduce the province’s own revenues, leaving it with fewer resources to finance its emergency response and sustain the already modest investment in human capital and infrastructure. Punjab met only 18% of its total expenditure in fiscal year 2018-19 from its own tax collection while the remaining expenditure was financed through federal transfers and grants.

According to World Bank’s estimates, Punjab has the potential to increase its tax revenues, without imposing new taxes or raising tax rates.
Punjab’s tax receipts currently account for only 0.8% of the province’s estimated economic output, indicating that the province may be collecting only a quarter of its tax potential, according to the World Bank.

The World Bank said PRIDE would support the Punjab Growth Strategy and the Punjab Public Financial Management Reforms Strategy, both of which were aimed at developing a robust public financial management system.

But the $304 million loan had been sought from the World Bank to make taxation more progressive, broaden the tax base, reduce interaction between taxpayers and tax collectors and facilitate taxpayers to improve the ease of doing business.

Last month, the PTI’s provincial government had used PML-N’s era statistics to seek concept clearance of the loan from the federal government as its own performance was not up to the mark.

World Bank documents showed that the total provincial tax collection was constantly on the decline for the last two fiscal years. In fiscal year 2017-18, which was the last year of the PML-N government, total tax collection by the province stood at Rs205 billion, which dipped to Rs191 billion at the end of second year of the PTI government.

During the past two years, the provincial tax collection cumulatively decreased by Rs14 billion or nearly 7%. Punjab government’s documents showed that the province’s tax-to-gross domestic product (GDP) ratio had increased from 0.4% in 2009-10 to 1.2% in 2017-18.


The Punjab government followed in the footsteps of the federal government that also acquired a loan of $400 million from the World Bank in the name of tax reforms.



Punjab is biggest population wise why not try getting advantage of that ?
 

Salza

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Pmln orange train fall out... This is how pmln literally starved out every provincez departments of Pakistan by making useless and unaffordable projects. Unfortunately, its pti and whole country who are now facing the consequences
 

Enigma SIG

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Pmln orange train fall out... This is how pmln literally starved out every provincez departments of Pakistan by making useless and unaffordable projects. Unfortunately, its pti and whole country who are now facing the consequences
It'd be better to not run the train as the government will effectively be subsidizing it (making a loss). Better to rent out the space below the tracks so the government can generate revenue out of it.
 

TheSnakeEatingMarkhur

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Do you know the top 10 tax payers of Pakistan? I predict all positions would be taken up by Iran Khan and his advisors.
Its not about politicians bahi... Ex PM Abassi himself said 97% of people dont pay income tax... now Khan has incresed the number but its still below 20% the day more than Half of Pakistanis started paying income tax we will see us growing... income tax to be specific not tax on sabun shampoo...

Seocndly we need to make a lot of changes in our country such as road tax... ta k qarzo se sadke na bnani pare...

National Insurance so that everyone is protected with our health system changed like mixture NHS of UK and Italian health services..
 

muhammadhafeezmalik

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Dont make thread, become filer and pay income tax which you wouldnt.
I pay more tax than our dear PM. I am regular filer since 2008.
It'd be better to not run the train as the government will effectively be subsidizing it (making a loss). Better to rent out the space below the tracks so the government can generate revenue out of it.
Still you have to pay for payback the loan taken to built this infrastructure.
Pmln orange train fall out... This is how pmln literally starved out every provincez departments of Pakistan by making useless and unaffordable projects. Unfortunately, its pti and whole country who are now facing the consequences
A country that can spend 6 billion on a road for the sleepy capital Islamabad 2 billion on office construction of Parliamentarians in Isb 10 crore on security of Parliament 70 crore for underpass on a small road HAS ISSUES WITH PAYING SUBSIDY ON TRANSPORT to b used by poor

1603690794614.png
 

muhammadhafeezmalik

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Its not about politicians bahi... Ex PM Abassi himself said 97% of people dont pay income tax... now Khan has incresed the number but its still below 20% the day more than Half of Pakistanis started paying income tax we will see us growing... income tax to be specific not tax on sabun shampoo...

Seocndly we need to make a lot of changes in our country such as road tax... ta k qarzo se sadke na bnani pare...

National Insurance so that everyone is protected with our health system changed like mixture NHS of UK and Italian health services..
Mr. Abbasi was at # 5 in top taxpayers list.


Now less people are paying tax:

The FBR has published the new Active Taxpayers List (ATL) for tax year 2019 and 2.53 million people have submitted income tax returns, said FBR Inland Revenue Policy member Dr Hamid Atiq Sarwar, who is also the official spokesman.

In tax year 2018, over 2.8 million people had filed returns, said Sarwar.

Instead of showing any increase in income tax returns, the tax base actually shrank by 279,000 or 11% in tax year 2019.


2.53 million or 1.17% of the population is tax filer. 3% population is NTN holder and 40% of NTN holders file tax returns.

If we take a closer look almost half of tax filers pay ZERO or less than Rs 5000 tax.
 

AZ1

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Mr. Abbasi was at # 5 in top taxpayers list.


Now less people are paying tax:

The FBR has published the new Active Taxpayers List (ATL) for tax year 2019 and 2.53 million people have submitted income tax returns, said FBR Inland Revenue Policy member Dr Hamid Atiq Sarwar, who is also the official spokesman.

In tax year 2018, over 2.8 million people had filed returns, said Sarwar.

Instead of showing any increase in income tax returns, the tax base actually shrank by 279,000 or 11% in tax year 2019.


2.53 million or 1.17% of the population is tax filer. 3% population is NTN holder and 40% of NTN holders file tax returns.

If we take a closer look almost half of tax filers pay ZERO or less than Rs 5000 tax.
Yeh bhi khoob rahi corruption kar ke hamara paisa kum kar ke tax ki shakal mai dei do masoom ban jao.
I pay more tax than our dear PM. I am regular filer since 2008.


Still you have to pay for payback the loan taken to built this infrastructure.


A country that can spend 6 billion on a road for the sleepy capital Islamabad 2 billion on office construction of Parliamentarians in Isb 10 crore on security of Parliament 70 crore for underpass on a small road HAS ISSUES WITH PAYING SUBSIDY ON TRANSPORT to b used by poor

View attachment 682680

What about orange train?

ElK5MnHW0AEhjBk.jpeg
 

AZ1

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Stay on topic. This is about tax collection and debt taken for tax collection. Make another thread on orange train, tag me in that thread, i will respond to the queries.
Yawn yawn how come shahid khan abbasi tax is more in 1 year as compare to nawaz sharif in 23 years?

PM Nawaz paid Rs35.9 million in tax over 23 years
 

Enigma SIG

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Yawn yawn how come shahid khan abbasi tax is more in 1 year as compare to nawaz sharif in 23 years?

PM Nawaz paid Rs35.9 million in tax over 23 years
By running PIA into the ground and giving the routes to Airblue that is how.
Still you have to pay for payback the loan taken to built this infrastructure.
The way PML-N makes it look like Nawaz paid out of his pocket for this project, why don't they do us Pakistani's a favor and use their personal bank accounts to pay for it?
 

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