Broadening tax base: FBR targets 3.8m tax evaders in new scheme

Hopes to raise Rs152b; each potential taxpayer to pay fixed rate of only Rs40,000.


Shahbaz Rana September 20, 2012

ISLAMABAD: The government is set to launch the biggest-ever amnesty scheme targeting 3.8 million tax evaders, who will be offered the chance to voluntarily declare their income and assets and have them legalised in return for paying a fixed tax of just Rs40,000.

Though the amount of tax may look small, it will fetch an estimated Rs152 billion and broaden the tax base by 100%, according to senior officials in the Federal Board of Revenue (FBR). At present, in a population of 180 million, only 3.4 million have national tax number (NTN) and many of them do not file tax returns.

The scheme, in its present form, is different from such offers made in the past, when the tax was charged in terms of percentage and amnesty was general in nature.

Under the new proposal, the FBR plans to target 3.8 million people, who have either been identified by using data of the National Database and Registration Authority (NADRA) or have been taxpayers in the past but stopped filing their income tax returns.

The success of the scheme will depend on the FBR’s ability to crack down on the evaders after the expiry of grace period. On previous occasions, all such schemes could not yield results due to the FBR’s inability to take any serious administrative action.

Talking to a group of journalists, FBR Chairman Ali Arshad Hakeem stressed that his top most priority was to find avenues to increase national income in the next two to three months. He said time was of essence as inability to work out a plan would make it difficult to achieve the annual tax target of Rs2.381 trillion.

In the first two months (July and August) of the current fiscal, the FBR has collected Rs216 billion and needed to bag Rs221 billion in September to reach the first-quarter target of Rs437 billion.

Hakeem said the authorities were working on a proposal to pick ‘low-hanging fruits’ in a bid to give a boost to revenue collection. He said they aimed to bring people in the tax net, but stressed that this should not be considered an amnesty scheme in the true sense.

“The low hanging fruits are available in the area of personal taxation,” but a lot depended on the ability of the FBR to capitalise on available data, he said.

The chairman said the FBR was working with banks to ask people to discharge their national duty by paying tax  at a fixed rate until a specific period. He added 3.8 million people had been identified by using NADRA database and by targeting those who have stopped paying taxes.

On the personal taxation side, the FBR hopes to benefit from NADRA’s data related to ownership of cars and houses, international travel and bank accounts.

However, in the past, the FBR has declared NADRA’s data ‘ineffective and raw’, which requires more work before catching potential tax dodgers. At that time, Hakeem was NADRA chairman and FBR was headed by Mumtaz Haider Rizvi.

According to an official of the FBR, Finance Minister Dr Abdul Hafeez Shaikh has given green signal to the FBR to launch a “voluntary declaration scheme,” but directed it to further fine-tune the proposal.

The proposal suggests stern action against those who do not avail of the opportunity and remain out of the tax net. Hakeem asserted that there was no pressure on the FBR from any quarter to let the people off the hook and said the clause relating to documentation of economy would not be withdrawn under any compulsion.

Published in The Express Tribune, September 20th, 2012.

COMMENTS (10)

Shooter | 11 years ago | Reply

Leave the poor politicians , and tax the rich poor. The poor politicians will collect the tax and doll out the money to the ultra poor, so that the ultra poor will vote for the poor politicians to bring the, back in power.

What a nation , what a country. Seems like either we are cursed or condemned.

Shahid Butt | 11 years ago | Reply

FBR should first AUDIT all the ministers ( both federal and provincial), All senetors, all MNAS'and MPAS'.All politicians to set the example for common man.All owners of land plots. If some body bought a plot for 50 lakh, he has to show whether he paid TAX on this amount. If not charge him 40% tax on that amount.

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