Revenue augmenting measures
Addressing a function of business leaders in the federal capital Prime Minister Imran Khan expressed displeasure over the swelling revenue shortfall and warned if Federal Board of Revenue (FBR) could not improve its tax collection performance it would be then wounded up to constitute new organization. He said a society can prosper with a healthy and egalitarian tax culture, adding, that the process of reforms in the FBR will continue to expand the tax net.
There is no denying the fact that the tax regime is regressive in nature with more emphasis on indirect taxes on common man and burdening over and over the business community with direct taxes. The big landlords, real estate business, and Benami assets owners, legal fraternity and specialist doctors are enjoying tax evasion. Likewise, the income and profits generated in small trade is yet to be documented. The business community had resisted the enforcement of Reformed General Sale Tax with the only cogent reason that why agriculture income is given exemption from the direct taxation. The Tax Ombudsman in its report had pointed out that tax collectors have wrongly given exemption to the owners of big landholdings on their income from live stock, diary and poultry farming treating it as agriculture income. The feudal class is also manipulating the window of tax exemption on agriculture for tax evasions by clubbing their incomes from industry and business enterprises with income from this sector. This farcical exemption must end by federalizing and enforcing agriculture income tax. A renowned economist and the then federal finance minister Dr. Mahboobul Haq invited the wrath of feudal lobby when he floated the proposal of 10 percent levy as agriculture income tax in the publication of Economic Survey of Pakistan 1984-85 edition. A feudal Yasin Watto was made finance minister in the Mohammad Khan Junejo cabinet.
The PTI government is yet to give its vision of progressive tax regime. The lacunae in Benami Act that curtail the powers of tax collectors need to be removed. The powers of imposing peanut penalties on Benami assets holders will not bring the desired results. The sellers and buyers of shares at the stock exchange pay tax but the brokers don not pay tax on their profits.
The government has so far failed in achieving its two goals pertaining to the broadening of narrow tax base and enhancing revenue collection. The revenue shortfall has exceeded Rs. 200 billion in the past seven months. Now it has decided to net media persons, sportsmen, and real estate tycoon in a desperate drive against tax evaders. But again consideration has not been given to bring the hefty agriculture income under the tax net which can generate sufficient revenue. A list of 2400 wealthy people who fall under these categories is being prepared by pickling 100 cases from every Regional tax Office and Large Tax Payers units. The Chief Commissioners’ Inland Revenue Services Conference held on Thursday deliberated over the cases of high profile tax evaders. The conference coincided with the Prime Ministers warning to dissolve if FBR if it does not improve its performance.
The questions still remain that it was the same FBR when the number of active taxpayers was 2.4 million during 2000-07. Why the number dropped to 1.2 million during the previous two governments of feudal and mercantile classes? What measures the present government will take to bring back the 50 percent active taxpayers back to tax net and net the non-filers and tax dodgers? The government has withdrawn the restrictions on non-filers and allowed them to buy expensive vehicles of 1800 cc and above engine capacity and immovable properties in the second finance bill passed by the parliament the other day. What are the impediments in initiating the process of CNIC based authentic tax profiling?
A few months ago the FBR had started sending notices to non-filers of income tax returns which could not be delivered because of incomplete and invalid addresses. Instead of making an authentic database of tax dodgers, second and third notices were served on the same invalid addresses. Of the 373 notices sent in the first phase 145 could not be delivered. It is time to give a workable tax vision backed by strong political will for its implementation.