The provincial tax systems in Pakistan are more or less based upon a colonial legacy. The dawn of 21st century has seen a visible change in the governance patterns at national as well as at sub-national levels especially in the developing countries. Pakistan too has very sincerely joined the race of government reforms on multi-institutional fronts. Reforms in tax regimes have been initiated as an important component of overall fisco-economic reforms. In this regard, Pakistan has also suitably modified its fiscal federalism. Not only public service responsibilities of the Provincial governments have been expanded but also several prudent opportunities have been created for the Provinces to mobilize their own resources.
2. Punjab has a population of nearly 100 million people. It contributes over 55% of the national GDP. Agriculture is its lifeline and industry is a major source of its respiration. In Punjab, rural-urban differentiations of lifestyles are fast disappearing. Literacy rate is increasing. People are becoming more politically conscious and socially motivated to improve their living standards. Punjab as a whole now wishes for faster development. The Government of Punjab is fully seized with its heart-felt obligation to fulfill the wishes of its people with more progressive, dedicated and sincere efforts.
3. Several expert studies have been conducted by both national and international subject specialists on the taxation system of Punjab. In all these studies, quick modernization of the Punjab’s tax system has been forcefully emphasized. Instead of multi-institutional tax administrations, a uni-hand tax management has been recommended. Punjab Revenue Authority is a product of such specialist recommendations. The Provincial Assembly of Punjab has enacted the Punjab Revenue Authority Act, 2012.
4. The “PRA model” has been designed on the pattern of an internationally recognized doctrine of SARA (Semi Autonomous Revenue Administration). The experiment of SARA model in developing world has generally produced very encouraging results. While fiscal policy is a domain of the legislature as supported by the technical aid from the executive government, its implementation remains an exclusive jurisdiction of tax collecting agency (which in Punjab’s case is PRA). Political economy considerations are confined to the formulation of tax policy, the collecting agency acts as apolitical entity. PRA will work as a neutral tax law enforcement agency ensuring that government’s due tax share in economic activities is reaped to the optimal level. But meanwhile it will make its best efforts to create and maintain a wise balance between tax enforcement and tax facilitation. Tax receipt maximization cannot be guaranteed unless taxpayers are facilitated in carrying out their businesses. PRA believes that disturbances or distortions in the market competitiveness can never provide security to government’s income from taxation. PRA wishes to board all the stakeholders on its voyage towards its mission for good tax governance.
5. PRA is a body corporate having perpetual succession and a common seal. It is headed by a Chairperson appointed by the Chief Minister on the basis of professional qualifications. Under the Chairperson are not less than four Members and a Secretary. Work distribution is on functional lines. Subject specialization is one of the main considerations for selection of Members and other officers or functionaries of PRA. Policy and other important work is carried out under the guidelines of the Advisory Council, which consists of the Finance Minister of Punjab, Chief Secretary, Punjab, Chairperson, PRA, Secretary, Finance Department and four members from private sector. Thus, PRA believes in the doctrine of inclusive tax policy formulation.
6. Initially, PRA has undertaken collection and enforcement of sales tax on fourteen services. The system of sales tax on services is based upon the universally cherished principles of self-assessment and self-compliance and on several other time-tested VAT doctrines. PRA will gradually expand the base and scope of service taxation through proper R&D techniques and will in future take over the management of other provincial taxes and levies. This will eventually result into discontinuation of other provincial tax collecting bodies in the Punjab.
7. PRA has its own vision, mission and values. It’s vision is to reach and stabilize itself at a level where it could ensure judicious revenue mobilization for sustainable development. To reach at such a visionary height, PRA is endeavoring to develop a durable system of modern and responsive tax management. In this regard, PRA is wholeheartedly committed to the internationally honoured values of “professionalism”, “fairness” and “trustworthiness”. To maintain the highest possible professional integrity standards, PRA is developing a very sound human resource (HR) policy to ensure pooling of the best available technical talent from multiple sources. PRA is not simply a name of an organization; it is an epithet of a philosophy of change on the horizons of fiscal administration.
8. PRA has commenced its functions from its headquarters in the provincial capital. It has a detailed plan to expand its physical reach in other divisional headquarters and major districts of the province. At divisional level, Commissionerates of PRA will be established with appropriate strength of well-trained manpower. Tax facilitation centres will be established in cities with sizeable taxpayers population.
9. Punjab Government has contracted arrangements with Pakistan Revenue Automation Ltd (PRAL) to provide information technology (IT) support to PRA during its formative phase. Sales tax on services will be received by the designated branches of National Bank of Pakistan, where PRAL’s infrastructural and technical support is available for the facilitation and assistance of the taxpayers in working out their assessments and filing their returns. PRA intends to make appropriate investments to develop its own IT capacity to serve its taxpayers in due course.