Tax authorities in the country seem content with milking the same cow dry, instead of bringing the fat cows in its barn to expand the tax net. What else then explains news reports of new proposals for the budget FY14, calling for higher taxes on salary earners?
For months on end, the Federal Board of Revenue made headlines with threats of an impending crackdown on tax evaders. Successive news stories quoted top tax men who warned that names of tax defaulters will be added to the Exit Control List and that other criminal proceedings will be initiated against them.
Months on, not only has that threat vanished into thin air. Proposals for the upcoming budget so far also appear to be devoid of any concrete moves to enhance the tax base or rein in tax thieves.
Official sources earlier told this newspaper, that FBR has suggested a hike in the tax rate applicable to the highest bracket of salary earners.
The argument put forth by FBR officials is that based on fair policy, those earning more should also contribute more to the national exchequer. However, the implementation of the same argument on individuals employed as private practitioners, traders, service providers, agriculturists, etc; seems to be conveniently shelved.
In recent weeks, tax authorities have also helped pull off another caper. Tens of thousands of expensive imported cars have crossed borders into the country, in the days following the announcement of an amnesty scheme for illegally imported cars.
Given the fact that these cars have been imported while paying dime on the dollar in terms of import duty; the loss caused to the national exchequer is significant.
Regularly offering amnesty schemes and overburdening existing taxpayers are factors contributing towards the deterioration of tax culture in the country. Due to such measures, salaried workers and the organisations that employ them are driven to seek loopholes in the tax regime.
On the other hand, each amnesty scheme fortifies the belief that another will be in the offing, thus encouraging shady business transactions.
Expanding the tax net and promoting a fair and comprehensive taxation system mandates that income taxes must be applicable equally across all economic segments. The current suggestion and recent amnesties in the absence of any concrete measure to expand the tax net are both contrary to that goal.
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