Provinces urged to boost tax collection

The Federal Board of Revenue (FBR) chairman has said provinces will have to make more efforts than the federation to collect taxes because their gap is large, while economic growth is also necessary for increasing taxes.

Sharing his viewpoint in a panel discussion held under 'Afkaar-e-Taza Thinkfest 2026 in Lahore, FBR chief Rashid Langrial said as per the National Finance Commission (NFC) Award meeting in 2009, provinces and the federation had to take the tax-to-GDP ratio to 15 percent. He said the provinces have three taxes, including the services tax, the agricultural income tax and property tax.

"If tax-to-GDP ratio is to be taken to 15 per cent, then the provinces have to contribute 2.5 per cent and the remaining 12.5 per cent has to be collected by the federation, and if this ratio is to be taken up to 18 per cent, the provinces' contribution will be three per cent," he said.

Langrial suggested that there should be a discussion on structural issues, adding that talks will be held on NFC issues, and it will also be discussed what should the federation do. "Should the federation spend money on small projects in the provinces? I think these issues will be resolved through mutual understanding," he added.

He said in Malaysia, property tax is five percent of GDP, in Indonesia it is three percent, in India it is two percent, while in Pakistan it is 0.8 per cent. He said the reason for low tax collection by provinces is not that much pressure by the federation on the provinces.

He said last year in Karachi, per capita property tax collected was Rs111, while in the Indian city of Bangalore, Rs11,233 was collected, which is 100 times higher.

In Lahore, Rs 623 has been collected per capita on property tax, while in Chandigarh, Rs1,276 has been collected. He said that the provinces will have to make more efforts than the federation to collect taxes because their gap is large.

Langrial said economic growth is also necessary to increase taxes.