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Article

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Studies on sectoral incidence show that industry bears more than two-thirds of the tax, while the services sector bears about 21 per cent and agriculture 3.0 per cent. In the services sector, transportation and trade together account for one-third of GDP. The wholesale and retail trade sector contributes 18 per cent to GDP but pays only 2.9 per cent in income tax. The potential realizable gap in this sector is 0.5 per cent of GDP. Except for a few companies, the transport subsector is dominated by small- and medium-size operators. Only air and shipping companies yield some revenues. Similarly, out of 2.7 million wholesale and retail trade units (employing a population of nine million), 85 per cent are small family-run stores. The entire direct and sales tax collection from the trade sub-sector constitutes 0.5 per cent of federal taxes. Real-estate services contribution to GDP is vastly understated due to huge undervaluation of the stated transactions. It is well known that this sector is the main source fueling the informal economy as most of the settlements take place in cash.

Publication Source

The News

Publication Date

12-30-2022

Pages

1-4

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