The tax mess

Thousands of FBR employees believe that they are off hook and have exhibited defiance in filing their returns

The tax collection organ is in a state of disarray. Reports say it is itself unable to comply with its employees for filing prompt tax returns. Thousands of FBR employees believe that they are off the hook and have exhibited defiance in filing their returns. Apart from 600 or more officers, there are hundreds of non-gazetted workers who have not come up with their balance-sheet of income and assets, hinting at a rat as it is widely believed that they thrive on corrupt practices. Thus, their filing of annual income tax and wealth statements remains an enigma.

This misery is in furtherance to the inability of the revenue collection department to make the rich and the powerful pay taxes. Pakistan is perhaps one of the disorderly countries where the tax base excludes hardened sectors like real estate, exporters and agriculture; and likewise burdens the salaried class to pay around 300% more tax than the country’s elite.

The FBR is in a race against time and is bound to expand its tax net to 6.9 million filers, whereas it presently lingers at 3.3 million. The gigantic task to double the target in the ongoing fiscal year is worrisome as the IMF programme mandates it to do so. On the other hand, Pakistan’s tax-to-GDP ratio has dropped to 9%, and lenders are often at loggerheads while negotiating with a weak tax-net country.

It goes without saying that revenue generation infrastructure is corrupt. All efforts to streamline it, and buoy its efficiency by curbing illicit practices have met with obstacles, owing to the rotten fish in the system. A lethargic bureaucracy and nepotism at work are responsible for this decay.

It needs to be remembered that the Reforms and Resource Mobilisation Commission (RRMC) pointed out that it faced resistance from the FBR and agencies concerned in getting access to relevant data and records, and was unable to comply with its task. This is so because the revenue generated is kept off the books in an informal economy to oblige black-marketers and mafias. This practice must end to ensure a transparent and credible tax base.

Published in The Express Tribune, December 3^rd, 2023.

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