A balanced approach is required to include all economic classes in the tax net, according to Sustainable Development Policy Institute (SDPI) Executive Director Dr Abid Qaiyum Suleri.
Suleri was addressing a press briefing at the SDPI office on Friday to share SDPI’s analysis of Federal Board of Revenue (FBR) tax directory, according to a press release.
The FBR released the tax directory giving details of corporate and individual taxpayers on April 16.
The SDPI analysis shows that out of total direct taxes of Rs739 billion collected in the fiscal year 2012-13, around 47 per cent or Rs344.67 billion of income tax were deducted at source as this amount was paid by registered business enterprises, the press release stated. The remaining 53 per cent was collected from individuals or non-registered entities, according to the analysis.
Suleri said the big fish, which enjoy luxurious lifestyles but fail to contribute their due share to the national economy, should be compelled to enter the tax net, the press release stated.
The SDPI analysis showed that only 23,845 registered companies filed tax returns with the FBR. That’s just 38 per cent of the total 61,989 companies registered with the Securities and Exchange Commission of Pakistan (SECP), according to the SDPI.
More shocking perhaps is that 45 per cent of these 23,845 companies filed zero taxes in their returns, the SDPI press release stated.
The tax contribution of the remaining 55 percent, which filed returns and listed non-zero tax amounts, was Rs315.85 billion or 43 per cent of the total direct taxes for 2012-13.
“This shows that the documented economy or registered business is contributing significantly in national revenues despite a high tax rate of 34 per cent,” the SDPI press release stated.
Suleri said the economy needs to be documented and the government should release a directory for the non-taxpayers as well.
He also highlighted that only 33 per cent of the total 124,000 registered Associations of Persons (AOPs), a form of registered business, filed tax returns. Only one out of every five registered AOPs listed higher-than-zero tax amounts in their returns. Their total tax contribution was Rs28.83 billion, or four per cent of total taxes, according to the SPDI press release.
Suleri said civic education is required for every citizen to pay tax.
Published in The Express Tribune, May 31st, 2014.