Checking politicians' income, expenditure: FBR can seek ECP help

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SOHAIL SARFRAZ

ISLAMABAD: The Federal Board of Revenue (FBR) can seek help from the Election Commission of Pakistan (ECP) to check the income and expenditure of politicians on the basis of details of assets declared by them provided the government intend to do the same.

Sources told Business Recorder here on Monday that FBR couldn't take the step of probing the income and expenditure of politicians unilaterally.

It is almost impossible for the tax machinery to take such a step without the support of the government. Depending on the seriousness of the government, the tax authorities can proceed in this regard.

"We have face stiff resistance from business and trade circles during implementation of the Annex-D (details of personal expenditure) of the income tax return form and seeking computerized national identity card numbers (CNICs) and National Tax Numbers (NTNs) of the unregistered buyers. The Board was forced to defer implementation of a key documentation measure of obtaining CNICs/NTNs of the un-registered buyers till January 2012. At the same time, Annex-D of the income tax return form was also amended on the request of chambers, tax bar associations and trade bodies etc. These powerful segments of the society tried to abolish the Annex-D by directly approaching the policy makers in Ministry of Finance. However, the tax authorities convinced the Finance Minister that the documentation of the economy is not possible without acquiring basic details of the personal expenditures under Annex-D of the income tax return form," the sources maintained.

They said that if the government was serious to check the details of assets of politicians, the FBR be allowed to acquire softcopy of the details of assets submitted to the Election Commission. "This too is only possible if the government directs the tax authorities to do so. Without the political backing of the government, the FBR itself cannot take the initiative against the politicians as a 'class.' Such kind of exercise to probe assets declared by the politicians is only possible on the directives of the ECP, superior judiciary or federal government," they added.

Few politicians might come under the tax net due to the on-going documentation drive of the FBR, but taking action against the politicians as a class is almost impossible without 100 percent backing of the government.

To a query they said that a few politicians regularly filed their income tax returns. "Even those filing returns are declaring negligible income. The number of politicians paying income tax above rupees one lakh is negligible. In the past when Wealth tax was in place, some politicians have declared their assets in the wealth statements, which facilitated the tax department to determine the true income and expenditures of the politicians," the sources added.

About the powers available under the Income Tax Ordinance 2001, they said that the FBR had ample powers to issue notice to anyone for obtaining information or filing of returns under the relevant provisions of the Ordinance 2001. "For example, the section 176 is related to notice to obtain information or evidence from any person or government department," they added.

Through a simple notice to the government department under section 176 of the Income Tax Ordinance 2001, the FBR can seek information about the citizens for tax purposes, if required. The authority of the officials of Inland Revenue under section 176 of the Ordinance 2001 is enough to obtain any kind of data from government departments for broadening the tax base. Even if the law of any government department does not permit to give information under the law, the FBR can issue a notice to such department under section 176 of the Ordinance for seeking information about the citizens. If the law of any regulatory body or department does not allow sharing of information, the FBR can seek such information from the authority under the relevant provisions of the Income Tax Ordinance 2001, which empowers the Board to collect such data, sources added.

On the other hand, the FBR can issue notice for filing of return under section 114 of the Ordinance 2001. Under section 114, the persons were

required to furnish a return of income for a tax year including every company; every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year; any non-profit organization; welfare institutions and owners of immovable property; owners of motor vehicle having engine capacity above 1000 CC and National Tax Number holders and other persons liable to file returns under section 114 of the Income Tax Ordinance 2001.

"There is no need of additional powers under the Income Tax Ordinance 2001 for determining the income and expenditures of the politicians. However, the orders and political backing of the government is enough to support the FBR for such a step," the sources added.