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"Developing a Behaviorally-Informed Communication Campaign for Tax Awareness in KP Province"


  • SOLICITATION NUMBER: 0002014373
  • INSTITUTION:  IBRD/IDA
  • ASSIGNMENT LOCATION: Pakistan
  • ISSUE DATE AND TIME: Feb 24,2025 05:18
  • CLOSING DATE AND TIME: Mar 10,2025 22:59

ľ¹ÏÓ°Ôº is supporting the development of a behaviorally-informed; multi-faceted communication campaign with the Khyber Pakhtunkhwa Revenue Authority (KPRA) and the Excise; Taxation & Narcotics Control Department (ETNCD) of the Government of KP -to increase property and sales tax awareness and compliance in the Khyber Pakhtunkhwa (KP) province of Pakistan. Domestic revenue mobilization is a significant challenge in Pakistan; particularly in the KP province; where Own Source Revenue (OSR) remains low. Increasing compliance with property and sales taxes is essential for improving fiscal space and reducing dependence on federal transfers. However; tax compliance in KP faces several barriers; including limited awareness and knowledge on how to report tax obligations; complex tax structures; mistrust in authorities; and inequitable information access; particularly for women. Addressing these challenges requires innovative communication strategies informed by behavioral science (henceforth; behaviorally-informed strategies) to raise awareness; enhance taxpayer engagement; and foster compliance. Property and sales tax in KP are levied by the ETNCD and KPRA; respectively; and each revenue authority is responsible for facilitating; promoting and enforcing tax compliance for each. The Khyber Pakhtunkhwa Revenue Authority (KPRA) levies sales taxes on services (officially; general sales tax on services or GSTS) and has an active Communication and Public Relations (PR) team that employs diverse platforms; including print; electronic; and social media; to connect with taxpayers and the public. Businesses are required to charge and remit sales tax from business-to-business and business ¨Cto-consumer transactions involving the sale and purchase of services (sales tax on goods is managed at the federal level). Businesses are responsible for reporting and remitting taxes received by other businesses and end consumers to the KPRA. As a result; businesses are KPRA's primary target group; yet consumers can also be targeted to promote compliance; since they are ultimately burdened with the tax. KPRA's efforts to date include a 360-degree communication approach; regular training workshops; taxpayer consultations; and interactive initiatives such as the "Mr. KPRA" 3D character to guide taxpayers on tax processes. Additionally; KPRA utilizes platforms like Facebook; Twitter; YouTube; and WhatsApp to disseminate information and address taxpayer concerns effectively. These ongoing activities provide a strong foundation for further enhancing taxpayer awareness and compliance through a collaborative communication campaign harnessing insights from behavioral science. Property taxes (officially; urban immovable property tax or UIPT) are levied by ETNCD; which primarily relies on in-person communication through local inspectors and officers across its offices in over 35 districts. Commercial and residential property owners pay property taxes; and are the focus of the ETNCD¡¯s communication efforts. Although ETNCD has limited engagement on traditional and social media; it maintains a presence on the department¡¯s Facebook page and leverages district-level offices to reach taxpayers directly. ETNCD communication activities have primarily focused on enforcement with minimal emphasis on taxation awareness. Key challenges in property tax collection include limited awareness of tax obligations; complex tax structures; mistrust in authorities; gaps in knowledge in businesses¡¯ reporting and remitting of sales taxes; and gender disparities in outreach (with most communication targeting male audiences). KPRA and ETNCD have experienced a lack of dedicated communication teams within organizations; and limited capacity to utilize digital platforms. These gaps highlight an opportunity to strengthen ETNCD¡¯s communication efforts and align them with KPRA¡¯s more advanced strategies.The report of the Impact/Vulnerability Analysis of General Sales Tax on Services (GSTS) and property tax on Women Taxpayers in KP provided valuable insights into the challenges and opportunities for enhancing the tax experience of women in KP. In context of GSTS; the research identified limited awareness among women taxpayers about the tax system and its processes. Most women rely on male family members or consultants to manage their tax affairs. The impact of GSTS on businesses is primarily indirect; as customers bear the tax burden. Furthermore; the study revealed a lack of incentives for women-owned businesses to register for GSTS; and the tax system does not sufficiently recognize the unique challenges faced by women entrepreneurs. For UIPT; the study exposed the intimidating atmosphere within ETNCD offices; marked by a lack of female staff and inadequate facilities. It also revealed that women property owners are not adequately informed about tax incentives or exemptions; with the majority unaware of the widow's exemption. Most women pay property tax due to legal requir

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