Lack of tax reforms: fiscal deficit to go up to six percent of GDP: World Bank report

Lack of tax reforms: fiscal deficit to go up to six percent of GDP: World Bank report

KARACHI  (January 08, 2011) : The delay in tax reforms deteriorated the financial condition of the country in 2010 and international donor agencies stopped funding, a World Bank report said. Aaj News while quoting the report said that due to lack of tax reforms, the fiscal deficit likely to go up to 6 percent of the GDP against the target of 4.7 percent, which would compel the government to borrow excessively from the banks.

In view of the given scenario, the State Bank would further tighten the monetary policy. However, the report pointed out that through broadening tax net by bringing services sector into tax net and abolishing tax exemptions to various sectors, additional revenue equal to 3.5 percent of GDP could be collected. These measures would help carry forward the second round of tax reforms to tax agriculture income and property transaction.