Leading Issues in the Economy of Pakistan: Agenda for Reforms The effective tax incidence as% of value added is as follows: Agriculture 2.4 Industry 26.4 Services 4.7 Therefore, there is a strong case for sectoral diversification of the Federal and Provincial tax systems. Recommendations Based on the above-mentioned reforms, the incidence of taxes on the agricultural sector and the services sector respectively will be achieved in the following ways: SERVICES SECTOR i. Development of the Sales Tax on Services ii. Levy of withholding income tax on electricity bills of commercial consumers iii. Introduction of import duty and sales tax on imports of services iv. Higher collection from the urban immoveable property tax AGRICULTURE SECTOR • Development of the Agricultural Income Tax The additional tax revenues, with the tax base of 2021-22, from implementation of the above-mentioned tax reforms are given in Table 16.5. Table 16.5: Additional Revenue from Tax Proposals DIRECT TAXES • Introduction of Progressive Corporate Income Tax • Higher withholding tax on Importers • Levy of Withholding Tax on Electricity Bills of Traders • Minimum Rental Income Taxation • Conversion of Fixed and Final Taxes into Advance Taxes • Reduction in Tax Credits and Exemptions • Broadening off the Base of the CGT • Higher Rate of CIT on Commercial Banks • Higher Rate of the Agricultural Income Tax* • Higher Rate of the Urban Immoveable Property Tax* • Others TOTAL Revenue (Rs in Billion) 75 60 30 50 100 40 35 65 100 80 50 685 (1% of GDP) 166