Officials who attended a meeting on broadening of the tax base told The Express Tribune that Finance Minister Dr Abdul Hafeez Shaikh came hard on the Federal Board of Revenue and questioned the integrity of tax officials.
The government recently began sending notices to over 700,000 tax evaders who are shying away from paying the due taxes. According to the officials, the finance minister said that despite pressures, the government was coming hard on tax dodgers, but officials in regional tax offices were taking bribes.
The minister also criticised the Federal Board of Revenue’s slow pace of sending notices to the evaders, while also highlighting flaws in it. He expressed annoyance over the policy of only sending notices, and taking no further action after that.
The Federal Board of Revenue (FBR) has so far sent notices to only 1,000 people against the identified number of 700,600. Tax bosses have assured the government that they will send another 3,000 to 5,000 notices during the next couple of days. They hope to achieve the end target by June 30.
Out of a population of 180 million, there are only 2.9 million national tax number (NTN) holders. Out of that, one million are dormant. Historically, successive governments have been heavily relying on regressive taxation to meet ever-increasing expenditures, instead of netting direct incomes. Pakistan’s tax-to-GDP ratio is 9.1 per cent, the second lowest in the region.
Shaikh has asked FBR to exercise powers under the Income Tax Ordinance to broaden the tax base. The bottom line was that the FBR was “unnecessarily defensive in the wake of rampant tax evasion” in the country, said an FBR official.
He said exercising powers did not mean arresting culprits, rather enhancing enforcement by initiating audit. He said the minister also asked to minimise individual officials’ discretion, while dealing with the evaders.
According to an official handout, the Shaikh has asked FBR to devise a mechanism for minimising the gap between the number of NTN holders and actual tax payers. He asked FBR to constitute a special team of selected officers and staff to process the devised mechanism, and assured of full cooperation not only from his ministry, but by all other governmental organizations, including the National Database and Registration Authority (Nadra).
He has also asked them create a blueprint of the success of ongoing efforts to net tax evaders, and submit a report by the end of June.
Published in The Express Tribune, April 10th, 2011.
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