Plea to resolve tax cases worth Rs100b

ISLAMABAD: The government has requested the Supreme Court to take measures to ensure the early disposal of tax cases involving approximately Rs100 billion, the Federal Board of Revenue (FBR) chairman Sohail Ahmed said on Tuesday. The appeal comes at a time when “the FBR is facing difficulty achieving its collection targets and any relief from the courts would be great”,  Ahmed was quoted as telling the Public Accounts Committee (PAC).

The amount is considerably higher than what the government wants to collect through the imposition of a flood surcharge and the reformation of the sales tax regime.

Ahmad told the parliamentary body that he had requested, through formal channels, that the Chief Justice Iftikhar Muhammad Chaudhry try for the “quick disposal” of these cases, as tax-related cases worth Rs37 billion were pending in the Supreme Court.

“The chief justice has responded to the request in a positive way and has ordered that two judges of the apex court be assigned in this regard,” Ahmed added.

The international community has been pressuring Pakistan to find ways to mobilise domestic resources for flood-related reconstruction instead of looking towards donor agencies.

The World Bank report suggests tax evasion worth Rs796 billion occurs in Pakistan per annum. The government is considering levying the flood surcharge on all income groups for generating up to Rs42 billion.

Initially, the authorities had planned to generate Rs138 billion through flood tax by imposing a surcharge on imports as well but Finance Minister Abdul Hafeez Shaikh later dropped imports from the list.

It was also drafting a law to reform the general sales tax by including services in the tax net and withdrawing tax exemptions on goods. The maximum collection on this account is estimated to be around Rs50 billion in the remaining six months of the current financial year.

“The corporate taxpayers are using delaying tactics in order to evade the taxes,” said Hamid Yar Hiraj of the PML.

An FBR official said that as many as 6,017 cases were pending in the high courts. He said it was difficult to determine the exact amount involved in these cases, as it could only be done after the decisions taken by the courts.

The FBR chiarman said that once the Supreme Court disposed of these cases, the tax machinery would be quick enough to recover the arrears even if they had to use force, as it had done in the case of the Karachi Port Trust, where it had frozen the accounts of the port authority in order to recover Rs8.2 billion in income tax last June. The KPT had not been paying taxes on the plea that it was a government organisation.

Sohail Ahmad said that Supreme Court’s decisions would also set broader parameters for cases pending in the high courts and that there was hope that the decisions would be taken as soon as possible.

Law Minister Babar Awan complains that the Supreme Court is too focused on certain cases at the expense of others, causing a delay in dispensing justice at the right time.

Published in The Express Tribune, October 20^th, 2010.