Glitch at the FBR

Why did FBR need to cut out the check digit from the NTNs at a time when deadline to file tax returns is days away

One would think that a government, ‘blessed’ with a public that is inclined towards tax evasion, and tax numbers that put it to shame, would take every possible measure that helps it increase tax revenue. Instead, problems are compounded when the governmental arm responsible for collecting taxes is plagued by inefficiency. In the latest development, the Federal Board of Revenue (FBR) ended up removing the last check digit from the national tax numbers (NTN) of the latest tax filers. While the development seems innocuous on the face of it, businesses that are only identified with NTNs on the weekly-updated Active Taxpayer List (ATL) are missing from the data that is at the disposal of commercial banks. This basically means that businesses which have filed their tax returns will still see withholding tax being deducted from their accounts, until the time banks and the FBR sync their ATLs.

The question now arises, why did the FBR need to cut out the check digit from the NTNs at a time when the deadline to file tax returns is just a few days away. Are we to think that the FBR, which has ridden on the back of higher rates of indirect and withholding taxes to increase revenue over the past few months, does not really want to refund the claims? Withholding taxes, in principle, are refunded to a filer when it has been determined that he has paid more tax than he needed to. We are inclined to believe that the government, while serious in its attempts to shore up revenue, is still faced with outdated IT systems, lack of infrastructure and inefficient officials. There is no doubt that the recent measures taken by the government have pushed people with white money into filing tax returns. However, developments like the latest one remind us of the inefficient government machinery and its handicapped infrastructure, which deter the authorities’ attempts to increase revenue. We hope the FBR and banks are able to resolve the issue as soon as possible, which on the face of it seems to be a minor glitch — unless it is meant to harass taxpayers.

Published in The Express Tribune, September 24^th, 2015.

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