In an attempt to tighten the noose around the affluent tax evaders, the Federal Board of Revenue (FBR) will target residents of the upscale neighbourhoods in metropolitan cities.
Talking to media about the move, FBR Chairman Tariq Bajwa said on Wednesday that residential landholders in the posh areas would be the first target of the bureau as it attempted to expand the narrow tax base.
He said those who owned or purchased properties in Defense Housing Authorities, Bahria Town and other expensive localities in Karachi, Lahore and Islamabad would have to explain their income sources and come in the tax net.
According to Bajwa, the FBR would expand the tax base by targeting consumption patterns of tax evaders. Currently, there are only 711,940 income tax filers in the country, which is less than half per cent of the total population.
Bajwa said that in the medium-term, the bureau was targeting an increase of 2.5 per cent of the population in income tax filers.
In the past, the FBR has made similar claims but failed to deliver despite claiming to have record of transactions made by about four million potential taxpayers.
What is different this time, according to Bajwa, is the complete freedom of work and the government’s commitment with the International Monetary Fund to increase the tax base.
Under this commitment with the IMF, the government has to send notices to 100,000 tax evaders before June 30, 2013. So far, the FBR has delivered notices to over 17,000 people, said Bajwa.
“We’re not sending notices for the sake of sending notice,” he added, explaining that tax evaders would be brought into the tax net.
Ownership of vehicles and international travelling are two more parameters which will be applied by the FBR to catch large tax evaders. Bajwa said the FBR has already sought travel details from the ministry of aviation.
He said benefits from broadening the tax base would gradually come after a time lag. “The Rs2.475 trillion collection target for this year is steep and very big but the FBR will try its best to achieve it,” said Bajwa.
While acknowledging that remittances and agriculture income were used as excuses to evade taxes, Bajwa said the government could not tax remittances.
In future, Bajwa said, the FBR would not announce tax amnesty schemes.
Talking about the Parliament’s authorisation for the FBR to access bank accounts of suspected tax evaders, the chairman allayed fears that people would rush to take their money out of the banking system, Bajwa said that since the authorisation, State Bank of Pakistan’s governor has reported that no unusual activity was witnessed in deposits.
Published in The Express Tribune, August 29th, 2013.