Revenue woes: Are government efforts to increase income-tax filers backfiring?

Finance minister admits fewer people have filed taxes in 2015 than in 2014

ISLAMABAD: Government’s efforts to increase income tax filers have fallen flat after 123,824 people, who had filed taxes in 2014, seem to have skipped the process for 2015.

“The number of tax return filers for the tax year 2014 stood at 1.047 million, and is (now) 923,346 for tax year 2015,” Finance and Revenue Minister Ishaq Dar stated in a written reply to the Upper House of Parliament on Thursday.

The admission before the upper house was a damning report card of the government’s efforts to boost tax filers and collection in the country where 3.79 million people hold national tax numbers (NTN). The government had imposed 0.6% withholding tax on banking transactions above Rs50,000 for non-filers under the current fiscal budget.

But the move has so far failed to produce the desired results.

Dar, however, was hopeful that the number of tax filers was expected to increase since the last date for filing tax returns for tax year 2015 had been extended to March 15. Under the income tax law, the last date for filing the income tax returns for any fiscal year is September 30. But the government has been continuously extending this deadline under one pretext or the other.

The extensions mean the government missed its March 1 deadline to publish the Active Taxpayers List (ATL).

Other measures to rope in more filers include the controversial tax amnesty scheme which has so far attracted only 2,507 traders and Rs250 million. Dar had previously claimed that it would attract around a million traders. This was the ninth tax amnesty scheme that the Federal Board of Revenue (FBR) has offered so far and the second by the incumbent Pakistan Muslim League-Nawaz (PML-N) government.

Dar’s reply before the Senate also suggests that the Broadening of Tax Base (BTB) scheme, under which 300,000 tax notices were sent to defaulters, too has failed to produce the desired results.

Under the $6.4 billion International Monetary Fund (IMF) programme, Pakistan is bound to expand its tax net.

The failure to expand the tax base is also a breach of a commitment given to the United Kingdom in return of millions of pounds grants.

Cancer department

The government told the Senate on Thursday that a cancer department which had been planned at the Sandeman Hospital in Quetta under the Aghaz-e-Haqooq-e-Balochistan package had been returned after the Ministry of Health was devolved to the province in the wake of the 18th constitutional amendment.

Minister for Planning, Development and Reform Ahsan Iqbal told the House in a written reply that the Rs300.002 million “Extension and Development of Cancer Hospital at Quetta” project had been submitted by the defunct ministry of health in October 2010.  But after the ministry was devolved, the PC-1 of the project was returned in August 2011.

Meanwhile, the house voted to consider and adopt a special committee for monitoring the implementation of Gas Infrastructure Cess Bill, 2015.

Western route inauguration this month

Minister of State for Parliamentary Affairs Sheikh Aftab on Thursday told the Senate that Prime Minister Nawaz Sharif is expected to inaugurate the western route of the China-Pakistan Economic Corridor (CPEC) in DI Khan later in March.

Replying to a question, he said that the western route will start from Havellian, Fatehjang, Pindigheb, Mianwali, D I Khan while passing through various areas of Balochistan to reach Gwadar.

He said funds had been allocated for western route and tenders for first phase of the project are expected to open next week.

Published in The Express Tribune, March 11^th, 2016.