Agenda of Federal Tax Reforms Chapter 9: Agenda of Federal Tax Reforms The objective of this chapter is to present a comprehensive agenda of reforms in the Federal tax system. The first section looks at the trend in the Federal tax to GDP ratio of Pakistan and presents estimates of the incidence of the tax system by sector and by income quintile. The second section highlights the high level of inequality in Pakistan and the large number of tax breaks and concessions enjoyed by the‘elite’. The taxation proposals in the Federal Budget of 2021-22 are listed in the third section. Based on this analysis the features of proposed reforms are identified in the last section. 9.1. Level, Composition and Growth of Tax Revenues The major taxes with different levels of Government are given in Table 9.1. The dominant share, 91 percent, of tax revenues are collected by the Federal Government. Table 9.1: Taxes of Federal and Provincial Governments FEDERAL PROVINCIAL • Income Tax• Sales Tax on Services/ Electricity Duty • Sales Tax• Agricultural Income Tax/ Land Revenue • Import Duty• Stamp Duty • Excise Duty• Urban Immoveable Property Tax • Petroleum Levy• Motor Vehicle Tax The trend in the overall Federal tax-to-GDP ratio is given in Figure 9.1. The peak was attained at 11.8 percent of the GDP in 2017-18. However, it fell to 10.5 percent of the GDP in 2018-19. The year, 2019-20, has been excluded from the analysis because of the negative impact of COVID-19. 89