KARACHI, Dec 14: A World Bank sponsored team of two Pakistani consultants Mr Shahid Kardar, a well known economist and Mr Shafqat Mahmood, a retired bureaucrat and a former PPP senator, held meeting with the Provincial Advisor on Excise and Taxation Mr Jalil and senior officials of the department to discuss matters related to administration of provincial taxation.

The meeting was in connection with a study on Sindh economy, sponsored by the World Bank, to find out the causes as to why a province that was historically one of the most affluent and developed provinces of the country has lost its leadership position to the more reforming provinces in Pakistan.

In Tuesday meeting the officials were reported to have acknowledged rampant corruption in their department. They proposed reward for those tax collectors who exceed their collection targets. Rewards, as the officials argued, would compensate for their low salaries and motivate them to collect more taxes for the provincial exchequer.

The taxation officials also pleaded for capacity enhancement of their department. Excise taxation officials and inspectors are mostly ill-trained and semi-literate and function more by intimidation and harassment rather than with the professional skill.

The Provincial Adviser and the officials were understood to have discussed the resource potential of the provincial and local taxes. Introduction of sales tax on services on a larger scale was also discussed.

The Sindh government initiated a programme of economic and structural reforms in 2001 with support of a $100 million World Bank Sindh Structural Adjustment Credit (SSAC).

The programme was successful in engineering a turnaround in the financial management. "The enthusiasm for pursuing reforms waned following the election of a new government in 03," a World Bank Concept Note observed last October. But in 2004, wisdom apparently dawned on the political leadership of Sindh who approached World Bank in July with a request to survey their province to prepare a comprehensive report on the economy of their province.

An initial exploratory mission of World Bank in August found that Sindh is definitely getting left behind other provinces in growth and development and that Karachi's problems were getting acute.

The present survey and study is being done to draw up a broad-based multi sectoral reform strategy that can address the slow and uneven pace of development in the province.

It is, therefore, expected to focus on accelerating growth and employment opportunities, narrowing down disparities, improving service delivery, revitalising Karachi and financing and coordinating the development efforts at the provincial and local levels.

Creating fiscal space remains key to such an strategy which calls mobilization of additional resources and restructuring of the taxes. The Applied Economic Research Centre (AERC) of Karachi University has already done a comprehensive work on the administrative structure, administration and functioning of the excise and taxation and board of revenue, the two revenue collection agencies of the province.

The four volume study is a reference document for the consultants appointed to do further elaborate study. The World Bank consultants are now expected to identify taxation instruments and draw up proposals for revamping the structure of these taxes.