FOR the first time in the history of the country, the Government has adopted a comprehensive and effective approach towards broadening the tax base, which has the potential to result in significant increase in filing of tax return and tax collection.
A presidential ordinance has been promulgated giving sweeping powers to the Federal Board of Revenue (FBR) for disconnection of mobile phones/SIMs, electricity and gas connection of non-filers and tax dodgers.
The National Database and Registration Authority (NADRA) will also share information with the FBR and the potential tax dodgers will be identified through the use of Artificial Intelligence (AI).
Numerous attempts were made in the past to expand the tax base but regrettably these could not produce the desired result due to stiff resistance by potential tax-payers especially the business community that has huge earnings but is not willing to pay due taxes.
There are countless businessmen or professionals who either don’t bother to file any return or pay taxes much less than what they should contribute to the national exchequer.
In this backdrop, the new ordinance can help make a difference as it contains a number of measures aimed at increasing tax collection and penalizing the non-filers.
The most important aspect of the strategy is the involvement of NADRA for broadening the tax base and sharing of information about citizens.
Other measures envisaged in the ordinance include a penalty of one thousand rupee per day of the default, imposition of additional advance tax ranging five to thirty-five percent on professionals using domestic electricity connections, extra tax rates on the industrial and commercial gas and electricity connections to unregistered persons; reduced rate of sales tax on POS-related outlets; and a favourable change in the definition of remittances through normal banking channels.
As the ordinance has been promulgated at a time when the deadline for filing of income tax returns is approaching, it is expected that the proposed punitive measures would result in substantial increase in the number of filers.
Though sharing of data by NADRA for tax purposes is unethical and may erode confidence and trust of the citizens in the Authority, the step would surely help identify tax dodgers.
Similarly, provision of electricity and gas connections as well as mobile phone service are the facilities for which citizens pay to the service providers and their disconnection on account of tax default would be highly unjust.
The plan is also faulty and defective as properties change ownership frequently but new owners normally do not bother to get electricity and gas connections in their names.
Therefore, it is quite possible that the tax dodger is someone else but the penalty of disconnection is imposed on someone else.
With this and other factors in view, the provisions of the ordinance should be implemented with caution and care.
