Ineffective FBR: ‘Govt must form another body to resolve low tax collection’

ICAP emphasises on inculcating tax culture.

The Institute of Chartered Accountants of Pakistan (ICAP) has urged the government to make a statutory body for policy-making in the country that must be separate from the Federal Board of Revenue (FBR).

“A statutory body should be created with representation of the Planning Commission, Ministry of Finance and Law, FBR and stock exchanges that can propose all important fiscal matters to the parliament,” ICAP President Naeem Akhtar Shaikh told The Express Tribune.

While elaborating his point, Shaikh said that the economy and population of Pakistan have expanded considerably in the last decade, and the current situation demands the government to take some crucial policy-making decisions.



“Since the FBR has not been able to achieve its targets owing to the absence of in-house expertise, the government must constitute such a body to resolve issues like low tax collection and documentation of economy,” said Shaikh.

Pakistan has a large parallel economy and the government must show political will and make people realise that the state is serious about collecting taxes, he added.

“The government should efficiently use NADRA’s database, electricity and gas distribution companies, airlines and hotels to identify non taxpayers and then verify their sources of earning and spending,” ICAP Taxation Committee Member Saqib Masood said while speaking at ICAP’s budget proposals seminar that was organised on Thursday.

He urged the government to speed up its efforts in making a system where national identity cards be used as the key identifier of all transactions.

“A central number will make filing easy for the taxpayers and will provide an access to the tax collection authorities to reach the relevant information,” said Masood.

Masood said that Pakistan has experimented many ways to develop a tax culture but with little concern to the actual stakeholders.

The reliance on amnesty schemes, shifting reliance from direct taxes to indirect taxes and on final tax regimes were the measures aiming towards improving the collection of revenue alone, instead of inculcating the tax culture in the society.

He also pointed out that the behavior of the masses has not been conducive in discharging their obligation to the state. These factors, coupled with other socio-economic realities have promoted the culture of low level of compliance in the country, he said.

Other ICAP budget proposals include the verification of wealth through independent agencies and creating deterrence through severe punishments in case the corruption cases are established. The government should tackle undocumented economy through measures such as introduction of tax credits on production of evidence of specified expenses and cross verification of payment made for medical, real estate, foods.

Published in The Express Tribune, March 28^th, 2014.

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