LAHORE: Repeated replacements of Chairman Federal Board of Revenue (FBR) in a short period of 22 months have inflicted negative impact on the administration and policy guideline of the Board, as every incumbent has preferred his/her ideas and policy measures causing lack of confidence and inefficiency among the staff.
Tax practitioners are of the view that the FBR has failed in broadening the tax base as more returns in the context of filer/non-filer do not tantamount to increase the revenue. Instead of minimizing concession and exemptions, the Board has to reduce the indirect tax rates to single-digit and also reduce the direct tax rates. The Board is collecting almost 80% of direct taxes through withholding that has resulted in an inefficient administration by and large.
Ch Qamar-uz-Zaman, former office-bearer of the Lahore Tax Bar Association, pointed out that both the capacity and training of tax administration has become an urgent need of the hour by ensuring restructuring of the Directorate of Training (DOT) to make the tax administration effective and efficient.
Shahid Mahmood, another tax practitioner has pointed out that the idea of Point of Sale (POS) integration has failed to achieve desired results due to the policy of lesser interaction between the tax collector and the taxpayer. He said the campaign of bringing more and more retailers of Tier-1 to the POS integration could not trigger due to the clear-cut instructions from a former Chairman Shabbar Zaidi of no interaction with taxpayers.
One FBR officer, requesting anonymity, confirmed the same while stating that the pace of registration for the POS integration system had slowed down due to such instructions. It may be noted that Prime Minister Imran Khan had warned of setting up a new FBR if the existing administration failed to deliver.
The present government has been focusing on introducing a tax structure that is not only capable of generating sufficient revenues to meet the government's need, but also embodies fairness and equity in taxation which reduces the burden of high taxes that distorts economic incentives, improves tax enforcement and promotes efficient and responsive tax administration. In this regard, various reforms/special initiatives and steps have been envisioned by the FBR, aligned with progress in the sectoral policies for the facilitation of taxpayers. These initiatives are intended to give fruitful results in the form of better revenue collection in line with efforts to facilitate the taxpayers for the best outcome.
For simplification/automation of registration of sales tax and income tax, a mobile app has been launched for online registration. However, biometric verification has been outsourced to NADRA to avoid any contact between a tax collector and taxpayer. Also, the 'Tax Assan' App has been launched which cater to the filing of simple returns.
The Board has introduced special withholding tax management plan, taxpayer education/awareness outreach initiative, and focused & risk-based withholding tax monitoring. To broaden the tax base, the Board has also obtained more than 3.5 million industrial and commercial users data from DISCOs and gas companies for broadening of the tax base and issued informal letters to them for registration. The economic survey of Pakistan suggests that the number of tax filers has reached around 2.7 million, which is a record high in the history of FBR for the tax year 2018.
Similarly, industrial and commercial data of DISCOs have been obtained which are being utilized for registration of those traders who have obtained commercial or industrial connections but are not registered for sales tax.
Copyright Business Recorder, 2020
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