Govt plans crackdown against tax evaders, losing Rs796b annually

FBR tries to weed out corruption in an attempt to increase revenue generation.

ISLAMABAD: The failure to bridge the continuously widening gap between the tax target and the actual collection during first seven months of the current financial year led to the government’s decision of establishing a cell which will help to launch a crackdown against 700,000 potential taxpayers.

The Federal Board of Revenue’s (FBR) Board-in-Council – the highest decision making body of the FBR – has endorsed the proposal of establishing the cell. The FBR will work with the National Database Registration Authority (NADRA) for interfacing potential taxpayers’ data and identifying a mismatch between people’s lifestyle and the amount of taxes they are paying.

The FBR would also take the endorsement of the Economic Coordination Committee (ECC) of the Cabinet for cracking down on the potential taxpayers until mid-February. The proposed cell would coordinate with NADRA and other government departments to obtain the data relating to travel, residence and utilities being used by the potential taxpayer or his family members.

Given the fact that the tax machinery could only generate Rs763 billion in seven months – which is less than half of the year-end target – the FBR is facing an uphill task to collect an average Rs168.2 billion in the remaining five months of the current financial year to reach the revised annual target of Rs1.604 trillion. However, officials are again working to further revise the collection target to Rs 1.55 trillion.

In order to halt the rising corruption trend and improve efficiency in the FBR, the authorities also promoted dozens of FBR officials from Grade 18 to 21. The officers from the Inland Revenue Services and the Customs were also replaced in a second major shakeup.

Earlier, the government had replaced key FBR members and the chairman to improve efficiency and arrest corruption that, according to a World Bank report, causes Rs796 billion losses annually.

“People with doubtful integrity will be removed from important positions,” said a senior FBR member.

He said the government, on Tuesday, transferred nine senior officials of the Inland Revenue Service and claimed that they brought in replacements based on merit.

Published in The Express Tribune, February 9^th, 2011.